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Iran must be confronted, the No. 2 official in the State Department said at the Herzliya Conference on Sunday, shortly after a five-hour meeting with Transportation Minister Shaul Mofaz, in charge of Israel's strategic dialogue with the US. US Undersecretary of State for Political Affairs Nicholas Burns said, "We have to confront Iran." Iran, Burns said on the first day of the conference, "is our most important challenge, a country with a radical agenda, a president that asserts that the Holocaust did not occur."

Burns vowed that the US "will continue to assert the right and the responsibility to maintain stability in the region.

"The Iranians have played a negative role in all the recent conflicts [in the Middle East]," Burns said, adding that while the US did not seek a confrontation with Iran, "no options were off the table."

Burns, along with US Deputy Secretary of Defense Gordon England, who also participated in the conference, met with Mofaz and Gabi Ashkenazi, currently the Defense Ministry director-general and the leading candidate to replace Dan Halutz as chief of General Staff.

Following the meeting Mofaz told the conference that 2007 will be "a year of decision."

"This is the year when the world will have the responsibility of determining whether the Middle East will face a nuclear arms race, the strengthening of the radical axis and the strengthening of world terrorism, or whether it will be possible to lead the Middle East to new horizons, to a moderate, pragmatic and stable future."

Mofaz said that it was necessary to look reality in the face and say clearly: "Iran is the heart of the problem in the Middle East, it is the most urgent threat facing the world, and this is a problem that needs to be dealt with before it is too late." Saying that a Middle East with a nuclear Iran "will not be the same Middle East," Mofaz also stressed that Iran with a nuclear weapon "is an existential threat to Israel. This is the time to stop Iran," he said, "before it is too late."

Burns added that the American administration viewed Iran as increasingly more isolated in the international community. He said that "Israel, Egypt, Jordan, Saudi Arabia and the Gulf states are US allies," later listing only four countries which support Iran: Belarus, Syria, Cuba and Venezuela. "With friends like that," Burns said to chuckles in the audience, "you can finish the sentence..."

Meanwhile, many of the American and Israeli analysts - both official and unofficial - at the conference were cautiously optimistic that Iranian influence in the Middle East could be curtailed, and that this process had already begun. The causes: isolation in the international system, economic mismanagement and a growing opposition to Iranian President Mahmoud Ahmadinejad.

"The Saudis have stopped hiding the fact that there are joint interests for Israel and Saudi Arabia, and [Saudi officials] are telling the media that the Iranian threat is greater than the Israeli one," Col. (res.) Eran Lerman, director of the Israel/Middle East office of the American Jewish Committee and a former senior IDF intelligence analyst, told The Jerusalem Post.

"It is ironic that [the Sunni Arab states] have lived for two generations with the assumption that the Jews have a nuclear weapon, but only when the Shi'ites are developing one do we hear [that they are developing their own options]," Lerman continued.

There is a real strategic opportunity for Israel to reach out to moderate Sunni governments, asserted Dr. Ian Bremmer, president of the political risk consultancy firm Eurasia Group and an expert on US foreign policy. This is "particularly true [in the face of] the active promotion of conflict and the aggressive policies of this particular Iranian government," he told the Post.

According to Robert Einhorn, a former US assistant secretary of state for nonproliferation and a member of the American Council on Foreign Relations, "there's a Sunni Arab-Israeli commonality of interest in containing an ideologically aggressive Iran."

Einhorn told the Post that the recent Gulf Cooperation Council declaration that the Gulf States would seek nuclear technology was "a message to Iran that others can do what they are doing and a message to the United States and the West that they had better stop Iran."

The main pressure on the Iranian regime appears to be local, and the lever of domestic opposition was on everybody's mind at the conference.

While "six months ago, Iranians were proud their country was seen - even in the Arab world - as a leader," said Einhorn, "at this point, they are beginning to see Ahmadinejad as a liability." According to Bremmer, "this [Iranian] government's economic mismanagement" has left it vulnerable to economic action against the regime, particularly centering on the country's energy supplies. "The Iranian economy is under pressure in a way that Saudi Arabia and Russia are not."

It is for this reason that "the Saudis are reluctant to talk about limiting energy production," despite the fact that the price of oil has dropped in recent months from some $78 per barrel to the current price of $52. "A $50 price pressures Iran," Bremmer believes.

"There are millions of Iranians who want to see regime change," asserted former senior American defense official Richard Perle, declaring that "the failure to help them [on the part of the US administration] is a shocking dereliction."

One former senior US government official told the Post that "the problem with Iran is that it doesn't recognize Israel and supports Hizbullah. But," added the official, speaking on condition of anonymity, were Iran to change these two policies "it would be possible to have a sophisticated and appropriate dialogue."

The Bush administration has authorized the U.S. military to kill or capture Iranian operatives inside Iraq as part of an aggressive new strategy to weaken Tehran's influence across the Middle East and compel it to give up its nuclear program, according to government and counterterrorism officials with direct knowledge of the effort.

For more than a year, U.S. forces in Iraq have secretly detained dozens of suspected Iranian agents, holding them for three to four days at a time. The "catch and release" policy was designed to avoid escalating tensions with Iran and yet intimidate its emissaries. U.S. forces collected DNA samples from some of the Iranians without their knowledge, subjected others to retina scans, and fingerprinted and photographed all of them before letting them go.

Gen. Michael V. Hayden, the director of the CIA, told the Senate recently that the amount of Iranian-supplied materiel used against U.S. troops in Iraq "has been quite striking." (By Lawrence Jackson -- Associated Press)

Last summer, however, senior administration officials decided that a more confrontational approach was necessary, as Iran's regional influence grew and U.S. efforts to isolate Tehran appeared to be failing. The country's nuclear work was advancing, U.S. allies were resisting robust sanctions against the Tehran government, and Iran was aggravating sectarian violence in Iraq.

"There were no costs for the Iranians," said one senior administration official. "They are hurting our mission in Iraq, and we were bending over backwards not to fight back."

Three officials said that about 150 Iranian intelligence officers, plus members of Iran's Revolutionary Guard Command, are believed to be active inside Iraq at any given time. There is no evidence the Iranians have directly attacked U.S. troops in Iraq, intelligence officials said.

But, for three years, the Iranians have operated an embedding program there, offering operational training, intelligence and weaponry to several Shiite militias connected to the Iraqi government, to the insurgency and to the violence against Sunni factions. Gen. Michael V. Hayden, the director of the CIA, told the Senate recently that the amount of Iranian-supplied materiel used against U.S. troops in Iraq "has been quite striking."

"Iran seems to be conducting a foreign policy with a sense of dangerous triumphalism," Hayden said.

The new "kill or capture" program was authorized by President Bush in a meeting of his most senior advisers last fall, along with other measures meant to curtail Iranian influence from Kabul to Beirut and, ultimately, to shake Iran's commitment to its nuclear efforts. Tehran insists that its nuclear program is peaceful, but the United States and other nations say it is aimed at developing weapons.

The administration's plans contain five "theaters of interest," as one senior official put it, with military, intelligence, political and diplomatic strategies designed to target Iranian interests across the Middle East.

The White House has authorized a widening of what is known inside the intelligence community as the "Blue Game Matrix" -- a list of approved operations that can be carried out against the Iranian-backed Hezbollah in Lebanon. And U.S. officials are preparing international sanctions against Tehran for holding several dozen al-Qaeda fighters who fled across the Afghan border in late 2001. They plan more aggressive moves to disrupt Tehran's funding of the radical Palestinian group Hamas and to undermine Iranian interests among Shiites in western Afghanistan.

In Iraq, U.S. troops now have the authority to target any member of Iran's Revolutionary Guard, as well as officers of its intelligence services believed to be working with Iraqi militias. The policy does not extend to Iranian civilians or diplomats. Though U.S. forces are not known to have used lethal force against any Iranian to date, Bush administration officials have been urging top military commanders to exercise the authority.

The wide-ranging plan has several influential skeptics in the intelligence community, at the State Department and at the Defense Department who said that they worry it could push the growing conflict between Tehran and Washington into the center of a chaotic Iraq war.

Senior administration officials said the policy is based on the theory that Tehran will back down from its nuclear ambitions if the United States hits it hard in Iraq and elsewhere, creating a sense of vulnerability among Iranian leaders. But if Iran responds with escalation, it has the means to put U.S. citizens and national interests at greater risk in Iraq, Afghanistan and elsewhere.

Officials said Hayden counseled the president and his advisers to consider a list of potential consequences, including the possibility that the Iranians might seek to retaliate by kidnapping or killing U.S. personnel in Iraq.

Two officials said that Secretary of State Condoleezza Rice, though a supporter of the strategy, is concerned about the potential for errors, as well as the ramifications of a military confrontation between U.S. and Iranian troops on the Iraqi battlefield.

In meetings with Bush's other senior advisers, officials said, Rice insisted that the defense secretary appoint a senior official to personally oversee the program to prevent it from expanding into a full-scale conflict. Rice got the oversight guarantees she sought, though it remains unclear whether senior Pentagon officials must approve targets on a case-by-case basis or whether the oversight is more general.

The departments of Defense and State referred all requests for comment on the Iran strategy to the National Security Council, which declined to address specific elements of the plan and would not comment on some intelligence matters.

But in response to questions about the "kill or capture" authorization, Gordon Johndroe, spokesman for the NSC, said: "The president has made clear for some time that we will take the steps necessary to protect Americans on the ground in Iraq and disrupt activity that could lead to their harm. Our forces have standing authority, consistent with the mandate of the U.N. Security Council."

Officials said U.S. and British special forces in Iraq, which will work together in some operations, are developing the program's rules of engagement to define the exact circumstances for using force. In his last few weeks as the top commander in Iraq, Army Gen. George W. Casey Jr. sought to help coordinate the program on the ground. One official said Casey had planned to designate Iran's Revolutionary Guard as a "hostile entity," a distinction within the military that would permit offensive action.

Casey's designated successor, Army Lt. Gen. David H. Petraeus, told Congress in writing this week that a top priority will be "countering the threats posed by Iranian and Syrian meddling in Iraq, and the continued mission of dismantling terrorist networks and killing or capturing those who refuse to support a unified, stable Iraq."

Advocates of the new policy -- some of whom are in the NSC, the vice president's office, the Pentagon and the State Department -- said that only direct and aggressive efforts can shatter Iran's growing influence. A less confident Iran, with fewer cards, may be more willing to cut the kind of deal the Bush administration is hoping for on its nuclear program. "The Iranians respond to the international community only when they are under pressure, not when they are feeling strong," one official said.

With aspects of the plan also targeting Iran's influence in Lebanon, Afghanistan and the Palestinian territories, the policy goes beyond the threats Bush issued earlier this month to "interrupt the flow of support from Iran and Syria" into Iraq. It also marks a departure from years past when diplomacy appeared to be the sole method of pressuring Iran to reverse course on its nuclear program.

R. Nicholas Burns, the undersecretary of state for political affairs, said in an interview in late October that the United States knows that Iran "is providing support to Hezbollah and Hamas and supporting insurgent groups in Iraq that have posed a problem for our military forces." He added: "In addition to the nuclear issue, Iran's support for terrorism is high up on our agenda."

Burns, the top Foreign Service officer in the State Department, has been leading diplomatic efforts to increase international pressure on the Iranians. Over several months, the administration made available five political appointees for interviews, to discuss limited aspects of the policy, on the condition that they not be identified.

Officials who spoke in more detail and without permission -- including senior officials, career analysts and policymakers -- said their standing with the White House would be at risk if they were quoted by name.

The decision to use lethal force against Iranians inside Iraq began taking shape last summer, when Israel was at war with Hezbollah in Lebanon. Officials said a group of senior Bush administration officials who regularly attend the highest-level counterterrorism meetings agreed that the conflict provided an opening to portray Iran as a nuclear-ambitious link between al-Qaeda, Hezbollah and the death squads in Iraq.

Among those involved in the discussions, beginning in August, were deputy national security adviser Elliott Abrams, NSC counterterrorism adviser Juan Zarate, the head of the CIA's counterterrorism center, representatives from the Pentagon and the vice president's office, and outgoing State Department counterterrorism chief Henry A. Crumpton.

At the time, Bush publicly emphasized diplomacy as his preferred path for dealing with Iran. Standing before the U.N. General Assembly in New York on Sept. 19, Bush spoke directly to the Iranian people: "We look to the day when you can live in freedom, and America and Iran can be good friends and close partners in the cause of peace."

Two weeks later, Crumpton flew from Washington to U.S. Central Command headquarters in Tampa for a meeting with Gen. John P. Abizaid, the top U.S. commander for the Middle East. A principal reason for the visit, according to two officials with direct knowledge of the discussion, was to press Abizaid to prepare for an aggressive campaign against Iranian intelligence and military operatives inside Iraq.

Information gleaned through the "catch and release" policy expanded what was once a limited intelligence community database on Iranians in Iraq. It also helped to avert a crisis between the United States and the Iraqi government over whether U.S. troops should be holding Iranians, several officials said, and dampened the possibility of Iranians directly targeting U.S. personnel in retaliation.

But senior officials saw it as too timid.

"We were making no traction" with "catch and release," a senior counterterrorism official said in a recent interview, explaining that it had failed to halt Iranian activities in Iraq or worry the Tehran leadership. "Our goal is to change the dynamic with the Iranians, to change the way the Iranians perceive us and perceive themselves. They need to understand that they cannot be a party to endangering U.S. soldiers' lives and American interests, as they have before. That is going to end."

A senior intelligence officer was more wary of the ambitions of the strategy.

"This has little to do with Iraq. It's all about pushing Iran's buttons. It is purely political," the official said. The official expressed similar views about other new efforts aimed at Iran, suggesting that the United States is escalating toward an unnecessary conflict to shift attention away from Iraq and to blame Iran for the United States' increasing inability to stanch the violence there.

But some officials within the Bush administration say that targeting Iran's Revolutionary Guard Command, and specifically a Guard unit known as the Quds Force, should be as much a priority as fighting al-Qaeda in Iraq. The Quds Force is considered by Western intelligence to be directed by Iran's supreme leader, Ayatollah Ali Khamenei, to support Iraqi militias, Hamas and Hezbollah.

In interviews, two senior administration officials separately compared the Tehran government to the Nazis and the Guard to the "SS." They also referred to Guard members as "terrorists." Such a formal designation could turn Iran's military into a target of what Bush calls a "war on terror," with its members potentially held as enemy combatants or in secret CIA detention.

Asked whether such a designation is imminent, Johndroe of the NSC said in a written response that the administration has "long been concerned about the activities of the IRGC and its components throughout the Middle East and beyond." He added: "The Iranian Revolutionary Guards Quds Force is a part of the Iranian state apparatus that supports and carries out these activities."

"We have to recognise it: negotiations have failed. Time is not on our side. I am not sure this view is shared in London, Berlin or Paris. But that is a mistake," Bolton told Le Monde newspaper Monday.

"The only response is to isolate (the Iranians) internationally as well as politically and economically. In the long term, in the I hope not very long term, the only real solution is regime change," he said.

Asked if this was the policy of the US administration, he said: "No. Regime change is not part of their working framework."

On the issue of Iraq, Bolton -- a key supporter of the 2003 invasion -- said that he "continued to think that the basic decision to overthrow Saddam Hussein was the right one."

"Retrospectively we should have transferred authority to the Iraqis more quickly," he said.

Asked about President George W. Bush's plans to send in troop reinforcements to stem the violence in Iraq, he said it was the US's "last effort."

Wondering if you got my PM, my sent box is kind of full, so I thought I'd ask.

As for the comments above, the IRI has a time line still left to run out on the UN sanction res. Expect some very concerted diplomatic effort among Perm 5 +1 leading up to that deadline, but as State Dept spokesman put it, "Ball is in Iran's court." as to what happens next.

Release of intel regarding IRI involvement in Iraq, Quods force detainees, IED evidence as well as related intel may be vetted ( for source protection, & accuracy) and declassified by then perhaps.

BAGHDAD -- Investigators say they believe that attackers who used American-style uniforms and weapons to infiltrate a secure compound and kill five American soldiers in Karbala on Jan. 20 may have been trained and financed by Iranian agents, according to American and Iraqi officials knowledgeable about the inquiry.

The officials said the sophistication of the attack astonished investigators, who doubt that Iraqis could have carried it out on their own — one reason a connection to Iran is being closely examined. Officials cautioned that no firm conclusions had been drawn and did not reveal any direct evidence of a connection.

A senior Iraqi official said the attackers had carried forged American identity cards and American-style M-4 rifles and had thrown stun grenades of a kind used only by American forces here.

Tying Iran to the deadly attack could be helpful to the Bush administration, which has been engaged in an escalating war of words with Iran.

One American soldier was killed during the initial attack and four more were abducted and killed shortly afterward as the police pursued the sport utility vehicles used in the attack.

The attack was focused on a meeting at a joint security station, where American and Iraqi forces mesh their efforts in the new security plan.

An Iraqi knowledgeable about the investigation said four suspects had been detained and questioned. Based on those interviews, investigators have concluded that as they fled Karbala with the abducted Americans, the attackers used advanced devices to monitor police communications and avoid the roads where the police were searching.

The suspects have also told investigators that “a religious group in Najaf” was involved in the operation, the Iraqi said, in a clear reference to the Mahdi Army, the militia controlled by the breakaway Shiite cleric, Moktada al-Sadr. If that information holds up, it would dovetail with assertions by several Iraqi officials that Iran is financing and training a small number of splinter groups from the Mahdi Army to carry out special operations and assassinations.

“I hear that there are a number of commando and assassination squads that are disconnected and controlled directly by Iran,” the senior Iraqi official said, citing information directly from the prime minister’s office. “They have supplied JAM and others with significant weaponry and training,” he said using shorthand for the group, from its name in Arabic, Jaish al Mahdi.

Confirmation of a Mahdi Army connection to the deadly incident would also support the argument by Bush administration officials that the group has a direct role in attacks on American troops.

Another senior Iraqi official said that military actions by the United States against JAM essentially pushed it toward Iran.

“During the conflicts between the Mahdi Army and the United States, Iran was the only side that supported JAM,” the official said. “And they told them, ‘Hey, we are here to help you and we are here to support you, and we will not let you down.’ ”

The Karbala operation involved 9 to 12 armed militants and at least five sport utility vehicles, the American military has said. The initial attack on the compound killed one American soldier and damaged three Humvees, the military said.

But what has caught the attention of investigators is the way the convoy of S.U.V.’s was able to give the impression that it was American and slip through Iraqi checkpoints unchallenged. An American military official said all possibilities were being explored, with the focus on whom the United States can trust, even among senior Iraqi officials, in the Karbala area.

“We’ve got to be very careful as to who we define as our allies, and who we trust and who we don’t,” the military official said. “Was the governor involved? Were the Iraqi police that were on guard complicit or just incompetent?”

The unusual nature of the attack has made it a major topic of discussion in the upper echelons of the Iraqi government. It has spawned bizarre theories including the idea that a Western mercenary group was somehow involved.

But the existence of what American commanders sometimes call “rogue JAM” — separate from the central, controlled militia — has put the Mahdi Army at the center of the investigation, officials say.

Two American officials in Washington confirmed that American military investigators were looking into the possibility of Iranian involvement in the Karbala attack. One of those officials said the working assumption by the investigators was that the operation had been carried out by a splinter group of the Mahdi Army.

The second official said the operation could be seen as retribution for three recent American raids in which Iranians suspected of carrying out attacks on American and Iraqi forces were detained. On Sunday, the Iranian ambassador to Iraq conceded that two Iranians detained in Baghdad last month were security officials, but said that they were making legitimate contacts with Iraqi government officials.

A sea change is beginning to occur in Iraq: for the first time since the insurgency took off, the terrorists are starting to run.

This is occurring not because the United States has successfully promoted political dialogue among Iraq’s torn communities, although a successful dialogue is certainly to be desired.

It is occurring not because the United States has given in to the recommendations of the Baker-Hamilton commission and others, who have suggested a policy of unilateral capitulation to the terror-masters pulling the strings of the insurgency in Damascus and Tehran.

Nor is it occurring because we have suddenly become better at winning “hearts and minds” in Iraq, although such an effort, as described by Lt. Gen. David Petraeus, would appear to be sound counter-insurgent policy.

The terrorists are on the run for one reason only: they fear the United States.

“In Tehran, they are now referring to the United States as mar-rouye domesh vastadeh – the Cobra standing on his tail,” says Shahriar Ahy, an Iranian-born political analyst who helped build the post-war broadcasting network in Iraq.

The sea-change began on January 10, when President George W. Bush announced that the United States would no longer tolerate Iranian and Syrian intelligence officers using Iraq as a playground for their murderous games.

When he announced the troop surge in Iraq, Bush also put Iran and Syria on notice. “Iran is providing material support for attacks on American troops,” he said. “We will disrupt the attacks on our forces. We'll interrupt the flow of support from Iran and Syria. And we will seek out and destroy the networks providing advanced weaponry and training to our enemies in Iraq.”

Those weren’t idle words. That very night, U.S. forces raided an Iranian intelligence headquarters in the Kurdish town of Irbil, capturing six Iranians. The Iranian government screamed that they were diplomats, but apparently only one had any sort of diplomatic credentials. My sources tell me this was Hassan Abbassi, a well-known strategist who is close to president Mahmoud Ahmadinejad.

The other five turned out to be Revolutionary Guards officers. My sources identified three of them by name, and told me they were providing a treasure trove of intelligence to their U.S. interrogators (who appear to be receiving help from an intelligence expert from the opposition Mujahedin-e Khalq).

“They are key people in the Sepah Quds,” the overseas terrorist arm of the Revolutionary Guards, a former Iranian intelligence officer told me.

Iranian exiles and Kurdish sources identified another captive as Brig. Gen. Mohammad Djafari Sahraroudi, a Kurdish affairs expert who is wanted by Interpol for his involvement in the 1989 murder in Vienna of Iranian Kurdish dissident Abdulrahman Qassemlou.

Also among those detained was Mohammad Jaafari, an aid to National Security advisor Ali Larijani, the sources said.

The raid in Irbil was in fact the second U.S. backed raid that captured senior Iranian revolutionary guards officials recently. Shortly before Christmas, coalition forces raided the headquarters of Shiite political leader Abdul Aziz al-Hakim, just three weeks after he was in the Oval Office meeting with President Bush.

During that raid, they captured documents which American Enterprise Institute scholar Michael Ledeen called “a wiring diagram” of Iran’s terror networks in Iraq.

Iran is believed to be operating a number of intelligence offices in Iraq similar to the one in Irbil, to plan terrorist attacks against U.S. forces and supply money and equipment to insurgents.

“The mullah infiltration of Iraq is far more extensive than the U.S. has thought,” said Iranian exile Sardar Haddad. “They have infiltrated every single ministry, especially the defense and interior ministries, not just with one or two people, but massively.”

Referring to the Irbil incident, “It’s not five Iranian agents, but 5,000,” he added.
The U.S. is also investigating Iran’s alleged involvement in the kidnapping and murder of five U.S. soldiers near Karbala on January 20, and reportedly has detained two high-ranking Iraqi generals suspected of collaborating with the attackers.

I am told that those interrogations have turned up astonishing information, including documents sent by the Iranian regime to Prime Minister Nouri Al-Malaki, offering to “welcome” an extended visit to Iran by Shiite Muslim cleric Moqtada al-Sadr and top members of his Jaish-al Mahdi militia.

According to one source, the generals revealed the names of nearly a dozen top Iraqi politicians who were on the payroll of the Iranian government, including a Shiite member of parliament convicted and sentenced to death in Kuwait for his involvement in the 1983 bombings of the U.S. and French embassies in Kuwait city.

Jamal Jafaar Mohammed is said to have fled to Iran in recent days, fearing U.S. forces would arrest him and send him to Kuwait. He was elected to parliament in 2005 as a member of Prime Minister al-Malaki’s Dawa party.

Yesterday, U.S. forces arrested deputy health minister Hakim Zamili, accused of helping Shiite militiamen to infiltrate his ministry. He was also accused of funelling money to Shiite death squads loyal to Moqtada al-Sadr.

The U.S. Cobra is finally standing on its tail. This strategy is clearly working.
In Tehran, shortly after the January 10 speech by President Bush, Supreme Leader Ayatollah Ali Khamenei set up two commissions, terrified that the policies of President Ahmadinejad were taking his regime to defeat.

A domestic policy review board is examining Ahmadinejad’s dismal handling of the economy, which has led to increased unemployment and runaway inflation.

A national security and intelligence review board led by Khamenei’s son Mojtaba and his chief of staff, Akbar Hejazi, is looking at Iran’s nuclear face-off with the international community and its aggressive posture in Iraq.

According to Iranian exiles who have been following these events closely, a rift has developed between Ahmadinejad and senior Revolutionary Guards “professionals,” who believe the President’s overheated rhetoric and behavior is endangering the survival of the regime.

“It’s not that these professionals want to make peace with America and sing Kumbaya with the opposition,” said Shahriar Ahy. “Rather, they feel that Ahmadinejad has brought in undisciplined amateurs who are riding roughshod” over their agencies and “destroying all the work” the professionals have accomplished over the past twenty years.

Tehran’s reaction to the more forceful U.S. policy in Iraq gives the lie to the U.S. politicians and analysts who have been arguing that the United States must talk to Tehran.

In fact, it shows they were completely wrong.

Council on Foreign Relations Iran “expert” Ray Takeyh, Washington Post reporter Robin Wright, and pro-regime lobbyist Housang Amirahmadi have been saying for years that pressure on the regime in Tehran will be counterproductive, because it will unite the people behind the regime.

“They have even argued against using coercive diplomacy,” says Iran analyst Hassan Daioleslam.

But Daioleslam and others believe recent events have shown just the contrary. When the U.S. squeezes the Tehran regime, they retreat.

“Coercive measures work against Iran. They worked in 1988 at the end of the war with Iraq, and they worked again in 1996 when Europe and the United States took a hard stance against Iran. The hard-liners only got strong when the West was soft with them,” he says.

A strong faction has emerged in Congress arguing for the United States to “go soft” toward Iran once again. Among the best known advocates of this policy are Sen. Joe Biden, Sen. John Kerry, Sen. Hillary Clinton, and Sen. Chuck Hagel.

But Daioleslam says the “pro-Iranians are wrong because they base their policy on two false assumptions: first, that the people of Iran support the regime. Second, that the factions are united. Both assumptions are just plain wrong as any reader who opens an Iranian newspaper can see immediately.”

The Tehran regime understands the stakes in Iraq very well.

Former foreign minister Ali Akbar Velayati, now a top advisor to the Supreme Leader, told the Iranian Student News Agency in August 2004: “What is happening in Iraq today will affect the whole region. If the Iraqi people resist and finally force the invaders to leave Iraq, that could become a model for the entire world because the Moslems will see that they could defeat the aggressors.”

Conversely, he argued, an American victory in Iraq could be fatal to the Islamic regime in Tehran.

As the insurgency deepened last year, Iranian Majles member Mojtaba Nia noted, “Every car exploded in Iraq will delay a month the American plot against us.”

Now we need to squeeze harder. It’s time for the U.S. Cobra to strike at the heart of the Iranian terror networks in Iraq, and shut down their supply lines once and for all.

U.S. military commanders in Iraq have shown members of Congress explosive devices that bear Iranian markings as evidence Tehran is supplying Iraqi militants with bombs, a senior U.S. government official said Saturday.

One of the lawmakers, independent Sen. Joe Lieberman of Connecticut, said he has seen some of the evidence, though he would not be specific. "I'm convinced from what I've seen that the Iranians are supplying and are giving assistance to the people in Iraq who are killing American soldiers," said Lieberman, who was attending an international security conference in Munich.

The senior official said military commanders in December showed lawmakers mortar rounds and other munitions and fragments that had Iranian serial numbers and markings.

The official, who requested anonymity because the evidence collected has not been made public, said U.S. generals also displayed improvised explosive devices that they said reflected Iranian style.

On Friday, Defense Secretary Robert Gates told reporters that serial numbers and other markings linked the Iranians to explosives used by insurgents in Iraq. His comments were among the Bush administration's first public assertions about evidence the military has collected.

The administration and military officials have said repeatedly that Iranians have been tied to terrorist bombings in Iraq. But U.S. officials have said little about evidence, including any documents and other items collected in recent raids in Iraq, to bolster such claims.

National security officials in Washington and Iraq have worked for weeks on a presentation intended to provide evidence for the administration's claims of what they say are Iran's meddlesome and deadly activities.

Officials say the materials — which in their classified form include slides and 2 inches of documents — provide evidence of Iran's role in supplying Iraqi militants with highly sophisticated and lethal improvised explosive devices and other weaponry.

Among the weapons is a roadside bomb known as an "explosively formed penetrator," which can pierce the armor of Abrams tanks with nearly molten-hot charges. One intelligence official said the U.S. is "fairly comfortable" it knows the source of the explosives.

The Iran dossier also lays out alleged Iranian efforts to train Iraqis in military techniques.

Government officials say there is some disagreement about how much to make public to support the administration's case. Intelligence officials worry the sources of their information could dry up.

Among the evidence the administration will present are weapons that were seized in U.S.-led raids on caches around Iraq, one military official in Washington said on condition of anonymity because he was not authorized to speak publicly.

Other evidence includes documents captured when U.S.-led forces raided an Iranian office Jan. 11 in Irbil in northern Iraq, the official said. Tehran said it was a government liaison office. The U.S. military said five Iranians detained in the raid were connected to an Iranian Revolutionary Guard faction that funds and arms insurgents in Iraq.

The assertions have been met with skepticism by some lawmakers still fuming over intelligence reports used by the administration to propel the country to war with Iraq in 2003. In fact, a report this week by the Pentagon's internal watchdog criticized prewar assertions by the Defense Department about al-Qaida's connections to Iraq.

Gates told reporters in Seville, Spain, on Friday that markings on explosives provide "pretty good" evidence that Iranians are supplying either weapons or technology for Iraqi extremists.

"I think there's some serial numbers, there may be some markings on some of the projectile fragments that we found" that point to Iran, he said.

Gates' remarks left unclear how the U.S. knows the serial numbers are traceable to Iran and whether such weapons would have been sent to Iraq by the Iranian government or by private arms dealers.

Explosives have been a leading killer of U.S. forces in Iraq, where more than 3,000 U.S. troops have died in the nearly four-year-old war.

Last week, Gates said U.S. military officers in Baghdad had planned to brief reporters on what was known about Iranian involvement in Iraq but that he and other senior officials delayed the briefing to assure the information was accurate.

A White House spokeswoman, Dana Perino, said Friday that such information would come from U.S. officials in Iraq, though she did not say when.

After nearly four years of fruitless negotiations between the EU-3 (France, Germany, and the United Kingdom) and Iran over the nuclear issue, the U.N. Security Council on December 23 passed Resolution 1737. It imposed limited, almost meaningless, sanctions on the mullahs' regime. But it also set a clock ticking: If Iran has not agreed to suspend its enrichment of uranium by February 21, the Security Council may contemplate more severe sanctions.

The evidence that sanctions could work is significant. Consider the economic picture inside Iran. A roughly 100-page report prepared by the foreign affairs and defense commission of the Majlis, the Iranian parliament, and dated September 2006 was recently leaked to the French daily Le Monde. The report analyzes the economic and social consequences of potential international sanctions. The product of six months' intensive discussion among economists and oil specialists, it was circulated at the highest levels of the regime, and to president Mahmoud Ahmadinejad.

The report underscores the vulnerability of the Iranian economy--especially the oil sector--to sanctions. At first glance, it might seem that a country with the second-largest gas and oil reserves in the world has nothing to worry about. But as the report notes, 85 percent of Iran's revenue comes from the sale of oil abroad. At the same time, Iran imports most of the refined products it uses, like gasoline. Iran consumes half a million barrels of petroleum products per day, of which 40 percent is imported, at a cost of $3 to 4 billion a year. In the last few years, Iran's consumption of petroleum products has increased 10 percent per annum, putting added pressure on the oil sector. Rising consumption should come as no surprise, given population growth and the government-subsidized price of gasoline, among the lowest in the world at 800 rials a liter, or about 33 cents a gallon. Iran exports 2.5 million barrels of oil a day (3 percent of world consumption). An embargo on these exports would have a great impact, though it would not be felt for at least a year.

Heightening the vulnerability of the Iranian economy to sanctions is the fact that half of its imports come from Western countries, including 40 percent from the European Union. In the event of sanctions, the bulk of Iranian industry would be paralyzed after just three to four months. Iran would lose between $1.5 and $2 billion in annual revenue. Not surprisingly, the authors of the report note: "It is important to delay any measures which could affect the population because of the risks of instability."

The Majlis report recommends "making every political effort to prevent the imposition of sanctions, while protecting the interests of the country and the national honor." It mentions that Iran can use economic leverage with countries that depend on it for oil (Japan, China) and "political and military dissuasion" with others.

An embargo would destabilize Iran's economy and weaken its rate of exchange, while discouraging private investment. As a result, the report says, Iran "would be forced to modify its national priorities, and to devote the bulk of its resources to preventing major social upheaval, which could cause a deterioration of living standards for an important part of the population." It also insists on the need to continue threatening Western nations with a "cold winter," a way of stressing that rising oil prices would have a huge negative impact on Western economies.

The report amounts to a warning to the regime that it could not withstand major economic pressure, because of the structural weaknesses of the Iranian economy and its fragile financial situation. According to the report, "the members of the regime who were interviewed by the commission indicated that any deterioration of the economic situation could cause social disturbances that would weaken domestic stability." Interestingly, the commission seems to distance itself from the hard line personified by President Ahmadinejad. It concludes that the simultaneous freezing of Iranian reserves abroad, imposition of an embargo on Iranian crude exports, and a ban on refined petroleum imports would plunge Iran into a deep hole both economically and socially. The implication is that sanctions could seriously weaken the regime.

Unrelated confirmation that isolating Iran might be an effective policy comes from the French experience in the late 1980s. Knowing of Iranian involvement in 11 terrorist bombings in the streets of Paris between December 1985 and September 1986, Jacques Chirac, then prime minister, decided to act. Longtime Chirac observer Franz-Olivier Giesbert, in his biography of Mitterrand, quotes Chirac as speaking contemptuously of the mullahs: "Like all people, Iranians hate losing face. They have their dignity. So if you treat them like chimpanzees . . . " And, "as long as you behave like savages, we will not have diplomatic relations with you."

France severed diplomatic ties with Iran on July 17, 1987. Less than a year later, on June 16, 1988, it restored relations--after five French hostages in Lebanon (kidnapped by Iran's proxy, Hezbollah) had been freed, attacks on French soil had ceased, and Tehran had sought a rapprochement. In that instance, French firmness worked. Apparently Tehran was unwilling to be cast as a pariah on the international scene, preferring to compromise to regain its honor.

There's no reason it wouldn't do so today--if it were actually forced into a corner. For either economic or diplomatic isolation to be fully effective, however, every major nation would have to be on board. And the prospects of this are getting dimmer by the day.

It is clear that Russia and China went along with Resolution 1737 only because its sanctions were so mild. In addition, none other than France is now going wobbly. While official French policy remains that a nuclear-armed Iran is unacceptable, President Chirac--who a year ago was leading the effort to secure a tough condemnation of Iran by the U.N. or, failing that, the E.U.--gives every indication of rejecting serious sanctions. While he tried to explain away as an off-the-record slip his statement on January 29 that he could live with one or two Iranian bombs (the real problem, he said, is proliferation), he made the statement in a recorded interview with the New York Times and other major publications. And there are grounds to believe that this backtracking reflects a good deal more than presidential inadvertence.

First, there is France's alliance with the Gulf monarchies. In the late 1990s, France signed treaties with the United Arab Emirates and Qatar obligating it to intervene militarily to defend these countries. Naturally, in the tense atmosphere of the region, the Gulf states are worried about Iran. Last year, the Saudi daily Al Riyadh reported that the leaders of the Iranian Revolutionary Guard, angered by Qatar's alliance with the United States and allegedly Israel, were threatening to attack Qatari oil and gas facilities by sea and air should a military confrontation occur between the United States and Iran over the nuclear crisis. In any such case, France would be treaty-bound to send troops to the region to retaliate against Iran. Qatari diplomats have been reminding France of its commitments. Such intervention is surely not a prospect Chirac enjoys; so toning town the rhetoric towards Tehran is de rigueur.

Second, Lebanon. Chirac is obsessed with the Lebanese imbroglio, for a number of reasons. Rafik Hariri, the former prime minister of Lebanon assassinated on February 14, 2005, was a close friend of his. Then, too, France has soldiers in the UNIFIL contingent in south Lebanon. And Iran has threatened to renew Hezbollah attacks in France itself if the French take a harsh stance against it at the Security Council. Relations between Hezbollah and France have been rocky in the past few months, and Chirac is probably seeking to avoid provocation.

Third, French business interests in Iran are huge: a staggering $35 billion in investments, excluding the oil company Total's contracts (Total has invested over $4 billion in Iran). France is Iran's second-largest source of imports (after Germany), claiming 8.3 percent of the country's total imports. Also, numerous French multinationals have entered the Iranian market in the past two years. Renault, the leading French automaker, for instance, has invested $2 billion in a joint venture with two Iranian automakers that will be Renault's second-largest operation in the world, turning out as many as 300,000 cars a year. In the event of economic sanctions, French companies would be hit hard. Chirac is surely taking this into account.

Whatever his reasons, it appears that even Chirac--until recently, one of the toughest on Iran--is giving up. Indeed, it may be that much of the world is resigned to letting Iran have nuclear weapons. But this cannot be the last word, given the stakes--the risk of losing the war on jihadist Islam and enduring a nuclear terror attack. If the United States and/or Israel are pushed to act militarily, some of the blame will belong in Paris as well as in Moscow and Beijing.

Olivier Guitta is a consultant on foreign affairs and counterterrorism in Washington.

Alicia Colon, The New York Sun reported that a renaissance that the ruling Iranian mullahs fear the most. If the Persians are awakened to their identity as children of Cyrus the Great, who wrote mankind's first charter of human rights, these oppressive regimes will topple domino-style. An excerpt:

... an Iranian dissident and former Muslim I met recently who told me that Korans are being burned in Iran, and that there is a strong movement toward the philosophy of Zoroastrianism. This man showed me the pendant he now wears, a symbol of the ancient religion (it is older than Judaism). This symbol, carried by many of the parade marchers, can be seen at persianparade.org.
The full text:
Did you happen to see that amazing Iranian parade last March on Madison Avenue? The smiling women were beautifully made up and garbed in colorful silks. The men wore blue headdresses and robes. Marchers carried a sign that read, "Good Thoughts, Good Words, Good Deeds." The music was engaging, the floats were filled with flowers, and happy marchers were chanting joyfully about Iran.
It's not likely that you did see the parade, because these Iranians are Persians, and we don't hear much about them. We should: They may end up being America's best allies in the war against Islamic jihadists.

There are, in fact, two Irans, and the lesser known one to most Americans is undergoing a renaissance that the ruling Iranian mullahs fear the most. If the Persians are awakened to their identity as children of Cyrus the Great, who wrote mankind's first charter of human rights, these oppressive regimes will topple domino-style. Besides Iran, the Persian heritage is embedded in Iraq and Afghanistan, and were it to be rekindled, a revolution unheard of in scope could occur. Does this sound like a pipe dream?

Not according to an Iranian dissident and former Muslim I met recently who told me that Korans are being burned in Iran, and that there is a strong movement toward the philosophy of Zoroastrianism. This man showed me the pendant he now wears, a symbol of the ancient religion (it is older than Judaism). This symbol, carried by many of the parade marchers, can be seen at persianparade.org.

I had to travel outside New York to meet with this individual, who still has relatives living in Iran. The trip was worth it, as I was able to learn more about what's happening behind the headlines.

"Immediately after September 11," my new friend said, "I knew we must go to Iraq." That the war option was apparent to this and other Iranians has eluded most of the liberal elite.

"Those who cannot remember the past are condemned to repeat it," George Santayana said, and I think of this quotation every time I read the speeches at the anti-war rallies and marvel at the ignorance displayed there. Sad to say, Americans aren't big on history, and that goes for our diplomatic representatives as well. The truth is, Americans have been fighting jihadists since Colonial times, when Muslim pirates were seizing American ships. I thought James Baker, a former secretary of state, was a smart man, and yet he and the Iraq Study Group came up with the naïve notion that we can negotiate with jihadists.

This is absolutely senseless. Thomas Jefferson and John Adams reported why after their failed peace mission in Paris: "It was written in their Koran, that all nations who should not have acknowledged their authority were sinners, that it was their right and duty to make war upon them wherever they could be found, and to make slaves of all they could take as prisoners, and that every Musselman [Muslim] who should be slain in battle was sure to go to Paradise."

Gee, that sounds awfully familiar, doesn't it? Well, as it turned out, the only thing that stopped the jihadists was war, and so Jefferson led us into the First Barbary War. James Madison led us into the second Barbary War.

The Persian Renaissance, known as Anjomane Padeshahi Iran, is being spearheaded by a charismatic leader, Dr. Froud Fouladvand. He has offered Iranian people the reason to fight by awakening their semidormant national identity, an identity that was overshadowed by radical Islam. In fact, my friend said, "the API draws on centuries of experience handed down by those who have battled this enemy from its virtual inception. We slew the first three rulers of Islam as Persians — and many of their military governors. Few people — even our own — are taught that even Imam Ali, father of the Shiites, was sent to hell by a Persian."

There are more than 7 million Persians living outside Iran, and many are connected through online communications, meaning theirs may end up being the first revolution fueled by Internet technology. According to API's English-language Web site, at iransara.info, Dr. Fouladvand is nearing Iran, and the overthrow of Islamic rule is scheduled to take place before the Iranian New Year, March 21. My Iranian contact says America should leave Iran to the Iranians, and that may be what is happening. Liberal pundits are continually criticizing the administration for not going after Iran because of its support of the Iraqi insurgency. Maybe President Bush has read his history and knows the Persians are coming, the Persians are coming.

Richard Beeston, The Times Online reported that the Emir of Kuwait Sheikh Sabah al-Sabah raised fears that the Gulf could be dragged into a new confrontation unless Iran satisfied the world that it was not seeking to build an atomic bomb. An excerpt:

“The President of Iran visited me here. We had a very frank talk. We told him that if nuclear energy will be used for peaceful purposes we will be first to welcome it,” Sheikh Sabah told The Times at Bayan Palace in Kuwait City. “But if it is the intention of his leadership to use this energy for military purposes, then we will be very unhappy. I hope they use their heads, that they will be reasonable, that wisdom will prevail. They must avoid this very dangerous stage which at present they are in and avoid the dangerous situation that might befall them” ...
The full text:
The Emir of Kuwait has implored Iran’s leadership to “come to its senses” and avoid plunging the region into a new conflict over its controversial nuclear programme. Ahead of his first official visit to Britain as Kuwait’s head of state today, Sheikh Sabah al-Sabah raised fears that the Gulf could be dragged into a new confrontation unless Iran satisfied the world that it was not seeking to build an atomic bomb.
“The President of Iran visited me here. We had a very frank talk. We told him that if nuclear energy will be used for peaceful purposes we will be first to welcome it,” Sheikh Sabah told The Times at Bayan Palace in Kuwait City. “But if it is the intention of his leadership to use this energy for military purposes, then we will be very unhappy. I hope they use their heads, that they will be reasonable, that wisdom will prevail. They must avoid this very dangerous stage which at present they are in and avoid the dangerous situation that might befall them,” the 77-year-old ruler said.

President Bush recently ordered a second aircraft carrier battle group to be sent to the Gulf to check Iran’s growing influence in the region. Iran is in defiance of the United Nations Security Council for failing to halt its uranium enrichment programme, which many fear could be diverted to produce fissile material used as the core of a nuclear warhead.

Kuwait, as Washington’s closest ally in the region and an astute observer of its neighbour Iran, is not convinced that the crisis has been averted. Asked about the threat of US or Israeli military action, the Emir replied: “I hope that the confrontation will not happen, but everything is possible.”

One result of Iran’s nuclear ambitions is the interest shown by other regional states to master nuclear technology. Turkey and Egypt have already announced that they will build atomic power plants.

Sheikh Sabah revealed that the oil-rich Arab Gulf states were also planning to build their own reactor. “It is true. We need nuclear facilities for peaceful usage. We will not be able to rely on oil to generate our electricity needs for ever. Therefore we are actively considering the nuclear option and we have commissioned a study to look into it. We are seeking one reactor that would serve the whole region.”

Experts suspect that the move, in a region blessed with the world’s largest oil and gas reserves, is intended to provide the Arab world with its own nuclear capability should it one day need a deterrent against an Iranian atomic bomb.

Underlying the tensions with Iran is the fear among rulers of the Gulf states that a resurgent Tehran will attempt to extend its influence in the Arab world by inflaming its Shia Muslim brethren. Last week Sheikh Sabah used a speech marking his first anniversary in power to appeal to his countrymen to “abandon differences”.

He gave warning of grave consequences for Kuwait if it failed to learn the lessons of neighbouring Iraq, where Sun-nis and Shias are locked in a sectarian civil war. Sheikh Sabah insisted that Kuwait, with a population of one-third Shia, would remain united.

By TERENCE HUNT, AP White House Correspondent
12 minutes ago
http://news.yahoo.com/s/ap/20070214/ap_on_go_pr_wh/bush_14WASHINGTON - Challenged on the accuracy of U.S. intelligence, President Bush said Wednesday there is no doubt the Iranian government is providing armor-piercing weapons to kill American soldiers in Iraq. But he backed away from claims the top echelon of Iran's government was responsible.

Wading into the debate, Bush said the Quds Force was instrumental in supplying the weapons — "we know that," he said — and that the Quds Force was part of the Iranian government. "That's a known," he said. "What we don't know is whether or not the head leaders of Iran ordered the Quds Force to do what they did."

R. Nicholas Burns, Under Secretary for Political Affairs
Remarks to the Brookings Institution
Washington, DC
February 14, 2007

Moderator: Carlos Pascual, The Brookings Institution

UNDER SECRETARY BURNS:Good afternoon. I want to thank Carlos Pascual for the
invitation to be here at Brookings this afternoon, and thanks to all of you for
coming. I want to talk for a little bit about our policy toward Iran, and then
I will be very happy to have a conversation and to respond to your questions
and receive your comments on how our administration is doing vis-à-vis Iran. I
suppose some of you have questions. Some of you obviously have views maybe pro
or contrary, but I look forward to that portion of this discussion. I am going
to be brief because I do think the discussion part of it is going to be the
most interesting this afternoon.

I say first if you look around the world and look at where the United States
critical and vital interests are engaged, you have to look to the Middle East,
to Iraq first and foremost, to the challenge that we have in front of us to be
successful in Iraq, to the conflict between the Israelis and Palestinians, and
the quest for nearly 60 years now by various successive administrations to try
to find a way toward peace, to the conflict in Lebanon—and today, of
course, is the anniversary of the death of Rafik Hariri; you have seen the
demonstrations peaceful in honor of him in Beirut this morning—and to the
conflict that we have with Iran. It is those four issues that are at the heart
of our engagement right now in the Middle East, and I would say that it is fair
to say that our Secretary of State and most of the rest of us at the State
Department are spending a huge percentage of our time trying to make sure that
American interests are being watched and being protected on all four of these
issues.

I am going to speak today about Iran. I would say that next to the challenge
that we have in front of us in Iraq, nothing is more important to the United
States in the years ahead than to deal with this challenge which is
multifaceted from the Iranian government. That challenge is an Iran that most
of the world believes is trying to achieve a nuclear weapons capability, an
Iran that continues to be in many respects the central banker of most of the
Middle East terrorist groups, of Hizballah and Hamas, of Palestinian and
Islamic Jihad, of the Popular Front for the Liberation of Palestine General
Command, just to name four terrorist groups.

And an Iran because of its recent policy in recent years, particularly through
the statements and actions of President Ahmadinejad, that has caused
instability in its relations with most of the Arab world and the countries of
the greater Middle East. Those three aspects are the challenges that are in
front of American foreign policy, in front of those of us in our government.
Our policy is to deny Iran a nuclear weapons capability. It is to diminish
Iran's capability of being successful in supporting these terrorist groups. It
is as the president said this morning in his press conference on Iraq is to
prevent Iran from providing the type of sophisticated IED technology that
currently is providing that is a great threat to the American and British
troops in Baghdad, in Basra and other places. It is also to help over the
longer term we hope the creation of a society and a government in Iran that
will be democratically-based and pluralistic, an Iran that wants to be part of
the region in a positive way and not a disruptive force in the region.

Finally, I think one of the other imperatives of our policy is that we have to
engage the Iranian people. As a country, certainly our government has an
interest in doing that. It is the world's most unusual diplomatic relationship.
We have an American diplomatic presence in Havana; we have found a way over the
last couple of months especially to talk directly to the North Koreans through
the efforts of our Ambassador Chris Hill who was so successful yesterday in
helping to bring about this achievement on the Six-Party Talks. We have an
improving relationship with Libya. We talk to governments that we do not like
or admire like the government in Zimbabwe. And yet we have no relations to
speak of with Iran. It is not possible now for us to have formal diplomatic
relations with the Iranian government, but it is possible for us to in effect
end the estrangement which is going on three decades now between the American
people and the Iranian people.

In addition to putting forward the policy ambitions that I have talked about in
the nuclear, on terrorist in Iraq, and the wider region of the greater Middle
East, we do have an ambition to try to bring Americans and Iranians together.
The Congress was nice enough to respond to this by giving us some money to do
just that. The United States Wrestling Team, the national team, recently went
with our strong encouragement to Iran to compete over a week's time and to
break down some of the barriers that have existed between us. We have brought
groups of Iranian doctors and nurses here, and we soon are going to be bringing
disaster relief officials here. These are programs sponsored by our government
to bring Iranians to our country, and it is important to break down the
division and separations between the two peoples.

I say that because history weighs upon this relationship. A lot of you of
course are experts on Iran, many of you have been there, but the two years 1953
and 1979 have taken on a huge importance in the psychology of this
relationship, and if we cannot make a breakthrough in the medium term, and I
think we probably will not be able to in official relations with the Iranian
government, surely we can work to try to bring people together and to try to
bring the societies together so that we understand each other better, because I
am impressed by the fact that it has been since January 20, 1981, that we have
had any official contact on any sustained basis with the government, and that
has also shut down a lot of the private avenues for contact between the two
societies.

Let me just say a word about each of these issues and then go on to a
discussion. The nuclear issue has been an abiding concern of ours and it has
been now 2 years since President Bush and Secretary Rice decided in February
and March 2005 that we would support the effort by the European Union, three
countries, Britain, France, and Germany, to try to achieve a negotiated
settlement of the nuclear program. We supported it for that first year before
Ahmadinejad took power later in 2005 a very active diplomatic dialogue between
the EU-3 and Iran. After Ahmadinejad's accession to power in August and
September 2005, most of those contacts shut down, the Iranian government in
fact unilaterally walked out of the talks with the EU-3, and that led us to
believe that we had to create a wider diplomatic coalition to deal with the
problem of Iran's nuclear weapons ambitions. It led our president to talk to
President Putin and President Hu Jintao about creating a permanent five and
German coalition of countries that would focus on the question of nuclear
weapons, that occurred in late 2005, and all throughout the last year, 2006,
you saw the foreign ministers of those six countries, the permanent five and
Germany, get together to put forward several propositions.

First from the IAEA Board of Governors that Iran had to meet the requirements
and demands of Mohammed AlBaradei and the IAEA Board, and you saw two votes in
September 2005 and February 4, 2006, where Iran was effectively repudiated by
the IAEA because it had violated the commitments it had made to them. That of
course has continued until this very day.

It was very interesting to see particularly in that second vote a year ago,
February 4, 2006, in Vienna, that Egypt, Brazil, Argentina, India, Ecuador,
Peru, Tanzania, Japan, and Australia joined China and Russia, the European
countries, the United States and Canada, in sending one message to the
Iranians, we do not want you to become a nuclear weapons power, we do believe
you have a right to civil nuclear power and we are willing to help you in that
regard, but we want you to abide by the restrictions that the IAEA is trying to
impose on you.

Very often in our press and public dialogue there is an image created of the
U.S. versus Iran on this nuclear issue. We have been able to achieve in 2 years
of diplomacy a very wide international coalition of countries from all
continents with all of the largest countries in the world included sending one
message to Iran. I think the only four countries that I can find that are
supporting the Iranians saying let them proceed with nuclear research at
Natanz, let them string together 164 or 3,000 centrifuges in a cascade in order
to master the enrichment process, those countries are Venezuela, Cuba, Syria,
and Belarus, but everybody else is giving Iran a very different message. We
have tried in a very patient, painstaking way to assert that a diplomatic
coalition of all of these countries can help the Iranians to think through
their isolation to give the Iranians a way out of that isolation toward a
negotiating framework.

After this very big IAEA vote in February of last year, on June 1st the
permanent five countries got together in Vienna and they put something even
more ambitious on the table, a proposal for the Iranians that would allow the
Iranians to create with an international consortium a civil nuclear industry in
their country because the Iranians have been saying, their public line is, we
do not want nuclear weapons, we want civil nuclear power, and based on some
proposals that President Putin had made in late 2005, the P-5 offer, and the
United States of course was a big part of this offer, said to the Iranians we
will help you create a civil nuclear industry and capacity in Iran for your
people. We will do so in a very transparent way through the IAEA. The most
sensitive aspects of the fuel cycle of course will be offshore, and that became
a very important issue in the subsequent talks with the Iranians.

I dwell on this for a reason. The entire world community is sending one
message, the entire world community is behind a negotiated solution, and our
country, the United States, is very much a part of that. I think when Secretary
Rice up the day before this announcement was made, May 31st, here in
Washington, to say that she would be at the table when Iran accepted these
negotiations, that the United States would dedicate itself to a long-term
negotiation, that we believe that diplomacy could succeed in trying to
dismantle Iran's nuclear weapons ambitions, that was I think perhaps the most
significant American government offer made to Iran since 1979 and 1980 on any
issue, but it was certainly the most significant offer made on the nuclear
issue, and that offer is still on the table. What happened to that offer? We
asked Javier Solana to represent the United States, China, Russia, and the
Europeans. He had a series of conversations in June of last year with Ali
Larijani, the Secretary of the Iranian Security Council, and we said to them
take a few weeks and look at this and get back to us. They took 4-1/2 months.
They finally got back to us in the second week of October 2006, and the answer
was, no, we cannot accept the offer.

The offer was if you, Iran, will suspend for the life of the negotiations your
nuclear efforts at Natanz, we the six countries will negotiate with you, and we
provided them with a three-page offer of inducements. Beyond this creation of a
civil nuclear program there were other factors, other inducement involved, and
Iran said no. Why did they say no? We believe that there was a debate within
the Iranian government which is not monolithic throughout the summer of last
year and the early autumn, and that those who said that they did not want to
accept that offer obviously prevailed in that debate.

We have kept the offer on the table since then. The Iranians of course have not
accepted it. We passed a Chapter VII Security Council resolution on December 23
which for the first time places Iran with I think 10 other countries of the 192
in the U.N. General Assembly under official Chapter VII U.N. sanctions, and the
Iranians have effectively said no since then.

Next week, on February 21st, Mohammed ElBaradei will report to the Security
Council at our request on whether or not Iran is complying with the terms of
Resolution 1737. The obvious answer will be no, because we know that Iran has
kicked out some of the IAEA inspectors, particularly, by the way, inspectors
from our countries, the countries of the six that made this proposal, which is
curious and interesting. ElBaradei will make that report, and then I think
those of us on the Security Council will have to entertain the possibility of a
second Security Council resolution that will gradually increase the pressure on
Iran, but always leaving this exit door for the Iranians that the offer remains
on the table that we do want to negotiate with you and that all of us believe,
including the United States, that a negotiated solution is possible.

So that is the nuclear issue from an international perspective over the last 2
years, and it remains the most important issue that we deal with on Iran policy
because of course the possibility that an Iranian government led by someone
like Mahmoud Ahmadinejad might become nuclear-armed capable has really
concentrated the minds not only of our country, but of all the countries of the
Middle East, certainly of Israel, but also of all the Arab states with which we
deal. And there is not a single country in that region, again with the
exception of Syria, who says that they think that it is okay for Iran to become
a nuclear weapon state. I wanted to spend a little bit of time on that issue.

I thought it was worth it just to give you a perspective of how hard we have
tried over 2 years now to try to engineer a diplomatic solution, and we are not
going to give up. We are convinced that sooner or later the cost to Iran of its
isolation are going to be so profoundly important to them, destructive to their
economic potential, that they are going to have to come to the negotiating
table.

What have we done to try to accompany this nuclear diplomacy? One thing we have
done is our treasury department has designated certain Iranian financial
institutions under the authorities given to us by the Patriot Act, prohibited
those institutions from doing business in dollars, doing business with American
financial institutions. We have also seen several European banks, Credit
Suisse, Credit Lyonnais, and HSBC, shut down all lending to Iran over the last
year, and increasingly we are seeing a nervousness in the international
financial community about doing business with Iran. And we are actively of
course encouraging this trend because we do want to send a message to the
Iranians that it cannot be business as usual, that we should not be content to
see the Iranians prosper from an active and open engagement with our financial
community without a price to be paid for it. So Treasury under Secretary
Paulson's leadership continues to take the lead on these very effective
financial measures and sanctions, and we believe they are having an effect.

The Iranians are telling people in Japan, Europe, and the Arab world, that they
are worried about this. Their worry is not just the United States pulling back
from an open and continual economic relationship; it is a variety of countries
around the world. So that is an effective measure that we have taken. We also
would like to see institutions like the E.U. and the European countries, Japan,
and some of the Arab countries, take their own measures, and we have begun to
see that. Two days ago the European Council passed a series of implementing
measures for the Chapter VII sanctions resolution to have the Europeans going
beyond the terms of the U.N. resolution to strengthen what they do to try to
limit the ability of Iran to have a business-as-usual relationship with the
Europeans. So that is another important avenue for us to try to show the
Iranians that there is a way out, there is an exit door, but there is going to
be increasing pressure on the Iranians economically if they do not deal with
the rest of the world on the nuclear issue.

We are also of course because of our interest in the Middle East, because of
our strong commitment to Israel, our strong commitment to our Arab friends,
trying to encourage the Iranians to see their role in supporting terrorism in a
different way. Iran is the major supporter of the major terrorist groups in
funding and in direction. The United States has been the object of some of
those terrorist attacks in the 1980s and the mid-1990s. Right now what Iran is
doing is attempting to destabilize the government of Lebanon, the
democratically elected government of Prime Minister Siniora, and is using their
funding for Hizballah to that air. Their funding for Hamas is actually
disrupting the attempt in the Palestinian community to unite and to put aside
their differences. It is also disrupting all of our ambitions for a positive
way forward in potential negotiations between Israel and the Palestinians. And
the actions of the Quds Force, and President Bush talked about this this
morning, in providing very sensitive and sophisticated explosive technology to
Shia groups inside Iraq has led to the deaths of American soldiers when those
Shia group use that technology, armor-piercing, against our own soldiers. So
the president said this morning in his press conference that of course we have
a responsibility to disrupt those networks inside Iraq. We have a fundamental
responsibility to protect American soldiers, men and women in uniform, and that
message has gone out to the Iranians and we hope that they will hear that
message.

We also obviously want to continue to express to the Iranians that they have a
choice. They can continue to operate as they are as the most disruptive,
negative force in the Middle East, and I think what they will continue to do if
they proceed in this fashion is to make themselves very unpopular with the Arab
world, with Europe, with our allies in Asia, and of course with the United
States, there is a price to be paid there as well.

As we go forward, I believe that a diplomatic solution to the nuclear problem
and all the other problems that I have mentioned is possible. If you look at
the history of the last 2 years which we believe has been successful in
creating a multifaceted American policy to deal with these many challenges from
Iran as well as an international policy, we believe that a patient, carefully
applied, skillful diplomatic approach by our country in concert with others can
be successful in convincing the Iranians that there is another way forward with
he international community. In that respect, I do not believe a conflict with
Iran is inevitable, it is certainly not desirable, and we are trying to give
every possible signal we can, the president this morning, Secretary Gates when
he was in Werkunde, at the NATO Defense Ministers' meeting in Seville last
week, Secretary Rice in her multiple comments over the last 2 weeks, our signal
has been to the Iranians we are looking for a diplomatic way forward here and
we hope the Iranians are going to respond to that.

That is a brief and albeit somewhat simplistic overview of the variety of
American interests that we have tied up in this very complicated relationship
with Iran. I hope I have given you a sense of how we are trying to proceed, and
I would be happy, Carlos, to respond to questions and ideas on this issue.
Thank you very much.

(Applause)

MR. PASCUAL: Nick, thanks very much. That really was an outstanding and I
really appreciate your willingness to go through the details of the history and
evolution of the relationship with Iran, the complexity of it.

If I could ask you a couple of questions and then we will turn to the audience.
I wanted to start out actually by offering congratulations for the developments
on North Korea in the last couple of days. Congratulations to the
administration, and particularly to Chris Hill who has done an incredible job
on the ground. And if indeed we can get a closure to Yongbyon and inspectors
back in, obviously the story is not over, but it is a significant step forward
and it is a much better situation than we were in even just a week ago, so
congratulations on that.

UNDER SECRETARY BURNS:Thank you.

MR. PASCUAL: I think it takes us back to the Iranians nuclear question, and if
we can come back to that for just a couple of minutes because the offer that
the United States put on the table I think really was extraordinary. It was a
statement that we would be willing to suspend action on sanctions if they would
suspend the nuclear program for the life of the negotiations, a change in U.S.
policy, where we had previously said that they had to abandon the nuclear
program and gave an opening here, and Iran still said no. The sanctions that
were put on the table were not as good I think as one ideally would have
wanted. I think there was a lot of pressure from Russia to loosen up on it.
This weekend we heard some interesting words from President Putin about the
role of the United States exceeding its Iran authorities. One would hope that
that indicates that President Putin will now be willing to in fact take a
strong stance on Iran so that we can in fact actually get a diplomatic solution
here.

But this a difficult equation because some might say that Iran feels like we
have been sanctioned, we have been talked about negatively, but in the end have
the costs really been that significant? We really have not felt that much pain.
The Russians are still there protecting us to a certain extent; China is coming
in behind the Russians. In the meantime there is a certain nervousness that one
sees in the West in particular because the administration for understandable
reasons has said that all options are on the table, including the military
option. So one inevitably wonders how long is there going to be patience.

There has been I think a very significant diplomatic effort thus far, it has
had its accomplishments, but we are at a very critical point right now, and can
we in fact get the Russians to take a more constructive stance, and is there a
prospect to in fact keep this diplomatic process alive even though it is going
to be a difficult one?

UNDER SECRETARY BURNS:Thank you, Carlos. The first thing I would say is that we
have got time. There is no one arguing that I know of inside the administration
or outside to the effect that we have to exhaust diplomacy in the next few
months. We have got some time. The patient application of diplomacy
particularly at a multilateral level we think can make a difference.

We were surprised by the Chapter VII resolution. It was one thing to be inside
negotiating for 3-1/2 months that resolution as I was with a lot of my
colleagues in the American government and to feel a little bit frustrated at
the end of the process 2 days before Christmas that we had not achieved a
stronger resolution, but that is the nature of business of compromise in the
United Nations Security Council. But it was interesting to track the impact of
that resolution in January and this month. It had a major impact in Iran, we
think. I think that is the view of the Russians, Chinese, and the Europeans.

What it did was it prompted a debate within Iran. Iran is a proud country. It
is a country that wants into the Middle East, with the Japanese, with the
Europeans, both economically, politically, and socially. It is not like North
Korea, a country that appears to be happy to try to exist in isolation. So the
symbol of a Chapter VII designation against Iran, again, there are only 11
countries of 192 in the General Assembly that are under Chapter VII sanctions,
was a very powerful one in the Iranians political system. It is not a
monolithic system, there are many voices, many different points of view, and I
think we have seen a balancing of sorts.

You have seen this extraordinary episode of a newspaper backed by Supreme
Leader Khamenei directly criticizing President Ahmadinejad for his management
of the nuclear issue with the international community. You are seeing Larijani
emerge and to go to Werkunde, to travel the capitals of Europe, and I think
today is in Saudi Arabia, to talk again about the possibility of negotiations.
This is hopeful. I do not lead if it will lead to negotiations, but it is
hopeful that the Iranians have emerged after 4-1/2 months of utter silence over
the course of the autumn and have begun to say that they are themselves seeking
some kind of diplomatic say forward, and will have to test that proposition. I
suppose the Europeans will be talking to Larijani, we will have to see what
emerges from it, but the positive thing is that there is a debate in Iran and
that there are many voices now saying in Iran there is a price to be paid for
being an international pariah, there is a price to be paid for having
resolutions passed in the IAEA or the U.N. Security Council. So I think there
is great value in this diplomatic process and we would be making a very great
mistake to say that you should put a time limit on diplomacy or we should
truncate the diplomatic effort because it is difficult or because it is time
consuming. If you have time before Iran is able to master the enrichment and
reprocessing stages and able to then manufacture fissile material into a
nuclear warhead, if there is time, then you ought to use this time to exhaust
the diplomatic possibilities and that is what we are trying to do.

I also think that there is a lot that countries can do outside of the Security
Council. All countries have a different relationship with Iran. Many of our
allies have diplomatic relations or active economic relations. It has been
interesting to see some of those countries begin to pull back. Some of the
members of the E.U. have on their own individually begun to diminish export
credits. I think there were 18 billion Euro in export credits last year from
the E.U. member states to Iran. You are beginning to see that slide and fall.
Agencies of the Japanese government have begun to shut down lending mechanisms
to the Iranians. And most importantly, the private sector, probably reading the
tea leaves about all this international pressure on Iran, beginning on their
own to shut down lending and investment in Iran.

So that if you put all this together in a carefully calibrated strategy, the
nuclear issue, the issue of Iran in Iraq, the issue of Iran's ambitions in the
greater Middle East, you see that a lot of countries are coming together in a
multifaceted way to try to contain and limit the Iranians and pressure them to
negotiate and to surface and to talk to the rest of the international community
about the fact that in each of these areas Iran is isolate. I find some hope
that we have arrived at that stage; we just have to be patient and hopefully
skillful in seeing this through to hopefully some kind of diplomatic solution
in the future.

MR. PASCUAL: So the picture you would paint is not really one of stalemate, but
one where there is in fact a dynamic at play and that one needs to appreciate
the complexity of that dynamic, and that we need to keep working at every point
of it?

UNDER SECRETARY BURNS:I do. I think there was a period of time over the autumn
when a lot of people in the press and academic experts, even some people in
government, were saying the Iranians seem to be doing very well. They are
proceeding at Natanz in their enrichment program and no one is stopping them,
no one is even saying anything or doing anything about it. They are flexing
their muscles in the Middle East, their president has called for the
destruction of Israel and nothing has happened, and yet what happened over the
last 6 or 7 weeks? The Security Council resolution passed and that created a
crisis of sorts inside Iran. They were stunned by it. They were surprised that
it was a 15-0 vote.

You saw the United States actively assert itself in Iraq to defend our soldiers
as we must do. You saw us station two carrier battle groups in the Gulf. We
have been in the Gulf since 1949, and it is not an Iranian lake. So the
Iranians should not have been surprised to see the United States do what we
have done for nearly 60 years, and that is to help provide security and
stability for our friends in the Arab world. Then you began to see a lot of
nervousness in the financial markets in Iran about these financial designations
by the U.S. treasury department and the steps by the E.U. and the Japanese
government, and all of a sudden in the middle of February the Iranians are not
doing so well, the Iranians are now questioning their own strategy, and I think
that is what is interesting and hopeful about this diplomatic process.

MR. PASCUAL: Very helpful. Let me turn the discussion from just Iran to the
interrelation with Iraq and the role of other countries in Iraq. A few weeks
ago I heard you on NPR as you gave a very useful explanation of both the
Iranian and the U.S. role, but pointing out that the United States is in Iraq
under a U.N. mandate and therefore we have a right to be there and we have a
moral position and a legal position to stop the intervention of other
countries. In the past few days since the revelations about the Iranian weapons
that have been used in Iraq, there has obviously been a maelstrom of press
about what that means, who is involved, what the role of the Iranian government
is or is not. We can come back to that, and I am sure there are going to be
lots of questions about it from the audience.

I think what could be helpful is you could help us create the context. Let's
assume that Iran is playing some role. How big could it be? Of the over 3,000
U.S. servicemen who have been killed, I think the general perception is that
the majority have been killed as the result of Sunni insurgent actions. How
important is Iran's role relative to the overall scale of the conflict? And why
now? Why is it that this issue has surfaced to the level that it has at this
point given that there have been indications of some form of at a minimum
Iranian weapons being used in Iraq for some period of time?

UNDER SECRETARY BURNS:Carlos, you are right I think to remind everyone that the
United States military forces are in Iraq under U.N. Security Council
imprimatur and that provides a legal justification for our presence and our
actions in Iraq itself. I think you are also right to make the distinction
between the different types of terrorist threats that we face. A very large
percentage of the American combat deaths, men and women in Iraq, are traced to
actions of the Sunni terrorist groups as well as the Shia terrorist groups, the
terrorist groups themselves.

What makes Iran's role so unique is that it is a state and an organ of that
state, the Quds Force, we believe has been supplying this sophisticated
explosive technology to the Shia groups, and we believe in turn that that
technology has been used to kill Americans. The number of Americans killed in
that process does not comprise the majority of our deaths, but the fact that a
state is intervening to supply this technology is a very important factor. It
is one that you cannot disregard if one of our primary responsibilities is not
only the maintenance of security in Iraq but also the preservation of the lives
of our soldiers which of course is an abiding American concern of every citizen
in this country and of our government.

So obviously we have got to combat Sunni-sponsored terrorism, al-Qaeda
terrorism, or Sunni terrorism, we have to combat Shia terrorism. But we have
also got to resist, and President Bush has talked about disrupting the Iranian
networks to do this, the attempts by another state to supply technology to
attack and kill our soldiers. I do know of any country in the world that would
not make the same choice that we are to defend our men and women in uniform.

We have been very careful in this process. We have detained Iranian military
and intelligence operatives in December and in January. We have released some
of them. We are still holding others. The message to the Iranians is we are not
going to stand for this and the Iranian government should stop it. That was
President Bush's message this morning; that was President Bush's message when
he spoke out about this a couple of weeks ago. The issue is not new. The issue
has been around for at least 2 years, and there is evidence of this type of
assistance to the Shia groups in Basra as recently a 2 years ago, and the
British government has had the same public complaint. In fact, Prime Minister
Blair went public and various British officials over a year ago, and we have
been talking about it publicly for well over a year, many members of this
administration, so we did not surface the issue in the last month. It became a
prominent issue I think because of the fact that we did detain those Iranian
operatives in Baghdad just before Christmas in December.

MR. PASCUAL: Nick, do we have a sense of who is fueling the Sunni insurgency?
If we can put aside for a moment the recognition that Al-Qaeda in Iraq is a
force there and that there is an assumption of connections with other
international parts of al-Qaeda and that support from there, but there is a
Sunni insurgency that is quite significant. Some have alleged that there is
support coming from other Sunni Arab states. What do we know about where the
funding and weapons behind that Sunni insurgency might be?

UNDER SECRETARY BURNS:I think that there is no question that some of the
insurgent activity in the Sunni areas of Sunni areas of Iraq is indigenous and
some of it is stimulated by outside forces, namely, al-Qaeda and other
terrorist groups, so it is a combination of the two.

I was listening to a debate, or actually a report on NPR 2 days ago about this
issue, and one of the people in the discussion asked, why is the administration
making such a big deal about Iranian support for Shia groups to this explosive
technology when this person asserted that the vast majority of American combat
deaths have come from Sunni areas? I am not taking issue with the factual basis
of where are soldiers are most under threat, but I would just give you the same
reason. We are concerned about terrorist and insurgent activity inside Iraq in
both the Sunni and Shia areas, but you have to be concerned when a state
outside of Iraq exerts itself in the way that it has to make it easier for
insurgents to go after our soldiers. So I do not think the question here is the
number of people who have been killed, because a fair number of people, too
many people have been killed through this technology, the question is should a
neighbor of Iraq be acting in this fashion.

We know that it is inevitable that Iran is going to play a role in Iraq and
that Iran is going to have diplomatic relations and economic relations and that
a lot of the current Iraqi leadership of course actually sought sanctuary in
Iran during the years of Saddam Hussein. We have never argued against a
peaceful role by Iran to help the Iraqis build a state, to help them build
their economy, but we do react and will continue to react against attempts to
go after our soldiers or for Iran to play in this case indirectly perhaps a
military role. I think that message has been broadcast now and we hope it has
been understood.

MR. PASCUAL: And presumably the same message would be for any of the Sunni
states if there is support for a Sunni insurgency that we take similar position
that that is a direct threat to the stability of Iraq and to U.S. troops and we
would be similarly against that?

UNDER SECRETARY BURNS:We have been saying since the very beginning of the war
in 2003 that Syria ought to be more careful to protect its borders and shut
down the crossing points of the insurgents to cross from Syria into Iraq
itself.

MR. PASCUAL: Maybe one final question, and then I will turn it over to the
audience. I really go back to this cross-border issue and the dynamics in the
region and the dynamics of refugees. There are 2 million Iraqi refugees now in
the region, and the tremendous number of 1.6 million displaced internally
within the country. For the most part, those refugees have been living with
extended family, and by many signs and reports from UNHCR, that they are really
reaching limits of hospitality, so to speak, and that there is in fact a
potential danger point here that the refugees who may come may actually result
in the emergence of more refugee camps or in fact the beginnings of refugee
camps because there is no place else to go.

We have seen from any other parts of the world the risks that are involved with
refugee camps with the flow of weapons, using them as recruiting sites for
insurgencies and for terrorism and so forth. Can you talk a little bit about
what the U.S. policy is on dealing with this problem of the refugee crisis?
What kinds of things can be done? Are we working with the U.N. on these issues
to try to create more of a regional dynamic in which we would get the states of
the region involved and engaged? In particular, is there a way to involve Syria
in this in a constructive way since probably 600,000 of the refugees are in
fact in Syria?

UNDER SECRETARY BURNS:I think you are right, Carlos, to focus on this. It is an
emerging, very serious crisis, and some governments in the region, particularly
the Jordanian government, have been especially hospitable and open to these
people who obviously are in dire straits. It is understandable by a lot of
families would leave Baghdad or Al Anbar Province in the Sunni Arab community
and get out of harm's way of this horrible carnage on the streets of Iraq.

So it is really incumbent on all of us to try to help address this problem. We
are working with the United Nations, with Paula Dobriansky, one of my
colleagues at the State Department who has been given the task by Secretary
Rice to coordinate our efforts. We are taking another look at whether or not
the United States should be more receptive to taking in some of these Iraqi
refugees. There were hearings in the Senate where Senator Kennedy spoke out
about this I thought in a particularly effective way, and so we are looking at
that, we are looking at the U.N. angle, and of course looking at what the
regional states including Syria can do to be hospitable and receptive and then
help them manage the impact of this in their own countries.

MR. PASCUAL: Let me turn to the audience for questions.

MS. GIACOMO: Carol Giacomo with Reuters. Undersecretary Burns, in recent public
statements you have put pressure on the Europeans to shut down export credits.
When you say that they have begun to take action, have they taken enough action
or do you think they should cut them off entirely?

And your other focus has been on Russia in which you wanted to shut down action
on Bushir and arms sales. Are the Russians going to deliver fuel to Bushir in
March or anytime around then?

UNDER SECRETARY BURNS:Carol, we actually applauded the actions of the European
Council the other day to decide on these implementing measures by the E.U. for
U.N. Resolution 1737. As I said before in my remarks, the E.U. seems to have
gone beyond the mandate, I should not say the mandate, the guidelines of 1737
in a very positive way.

I think what you are seeing is an evolutionary process here. A year ago last
month before the first of these six meetings of the foreign ministers of the
P-5 countries and Germany, nobody was talking about U.N. Security Council
sanctions, and yet we were able to convince a wide variety of countries to
support them and to vote on them in December 2006, and now we are on the verge
I think of another process in the Security Council. So I think you have begun
to see movement in Europe, in Japan, in the Arab world, that there has to be a
response to an Iranian government that is not listening to Mohammed AlBaradei,
not listening to Ban Ki-moon, not listening to any government, that is marching
ahead toward further expansion of its research efforts at Natanz. A lot of us
expected President Ahmadinejad to say in his speech on Sunday what various
Iranians thought he would say, and that is to announce a further expansion.
What he did was announce that there will be a big announcement in April, so we
will have to wait and see what they announce. But the movement in Iran is away
from compromise and so I think you are beginning to see an effort by the E.U.
and other countries to ratchet up the pressure. Is there more than can be done?
Certainly, yes. Our government decided long ago to end a normal economic
relationship, to impose sanctions, we certainly do not provide export credits
to stimulate trade with Iran, and we think that other countries should try to
cut that back.

On the issue of Bushir, you will remember there is 1737. There are some
exceptions written into this for certain countries' activities in Iraq, and one
of them was Bushir. It is not our decision as to whether or not when the
Russians should deliver to Bushir. That is going to be up to the Russian
government. I do not think they need public advice from me on that.

As to the question of arms sales, if a country is under Chapter VII sanctions
in the United Nations system, then our view is that no country should sell arms
to Iran, and that has been our message to the Russian Federation consistently
for well over a year since Russia first talked about this in early December
2005, and we have not changed our view. I would think that what you are going
to see is if the Iranians continue to essentially snub the international
community, and if they continue with this experiment in cascades of centrifuges
at Natanz, you are going to see the international community move to strong
sanctions, whether they are unilateral sanctions by individual countries,
whether they are sanctions from the E.U. or other groups of countries, or U.N.
Security Council sanctions themselves. That is the clear trajectory
internationally.

MS. DONOHUE: Nina Donohue, Fox News. If I may take the liberty of asking you a
question not about Iran, but on Putin's tour of the Middle East this week.
Russia was very quick to recognize the Hamas-Fattah deal and we were told the
U.S. is still studying it. In the light of this, I would like to ask you do you
think Putin is delivering the correct message to the Quartet in the region
while he is there, or is he undermining the Quartet's mission in any way?

MR. PASCUAL: Just to clarify, we did not quite hear the deal. You mean between
Hamas and Fatah?

MS. DONOHUE: Between the two factions, yes.

UNDER SECRETARY BURNS:Russia is a member of the Quartet. There was a meeting of
the Quartet 2 weeks ago in Washington, and Mr. Lavrov, there was a large-scale
agreement at that meeting. There will be another meeting of the Quartet very
soon in Europe, so we value the role that Russia is playing. It is not for me
to question the Russian president. I have not even seen most of the statements
he has made in his tour of the Middle East, so I just do not want to question
the states of someone if I have not seen those statements.

Russia has been an important member of the Quartet, and Russia with some
periods of deviation has essentially been with the Quartet for a great many
months, so there is no reason for us to question Russia's motives there. I
would also say Russia and the United States do not see always eye to eye on the
question of Iran. Russia has a diplomatic relationship, a military
relationship, they are building a nuclear reactor there, but Russia has been a
very effective partner of the United States we think on the issue of the
Iranian nuclear weapons program and it was with Russian support that we
achieved Resolution 1737 and we have had very good discussions with the Russian
government just over the last 3 or 4 days and also last week on this issue. So
we are rather comfortable with where we are with the Russian Federation as well
as China, and I think the Iranians need to understand that.

QUESTION: On the issue of Iran supplying weapons and weapons technology, you
said that we cannot stand for it, we will not ignore it. Is the administration
beginning to make a case for military action against Iran? By the way, another
think tank this morning as to whether this is unprecedented, there was said
Nixon did not sidetrack negotiating with China even though China was arming
people who were killing Americans in Indochina. So there seems to be a
precedent for talking to a country that also was up to devilish things.

My main point is, are we beginning to hear the rhetoric that will lead to
military action against Iran? Otherwise, with all respect, is this a sort of
threat without any special reason or purpose?

UNDER SECRETARY BURNS:Barry, we are on a diplomatic path. As I said before but
I will be happy to repeat it to you, we have some faith that this diplomatic
coalition that we have put together over the last 2 years can succeed. There is
no reason for us to become impatient with diplomacy. There is every reason for
us to be patient and skillful and focused on an international level to try to
send the right signals to the Iranian government. If you listen carefully, and
I know you have been over the last couple of weeks, every senior American
official from the president to the Secretary of State, the Secretary of
Defense, has been saying the same thing, that we are on a diplomatic path that
can succeed, we are not trying to provoke or start a military conflict with
Iran. That is not what this all adds up to.

I would also just bring you back to this offer made by the United States,
Russia, China, and the Europeans, in June of last year. It was an
extraordinarily important offer. It is still on the table. I am surprised when
I read in the press that the United States will not talk to Iran. We are trying
to talk to the Iranians. The Secretary of State said, again, Secretary Rice,
about a month ago when she was testifying before Congress just after the
president's Iraq speech, I want to make it clear, if the Iranians accept this
offer to negotiate on the nuclear issue, I, the Secretary of State, will be
there, I, Condoleezza Rice, will be at those negotiations. That is quite an
important offer to the Iranians. We are sending a signal that we are interested
in a diplomatic negotiation on the nuclear issue.

She also took the opportunity to say that she would obviously use the occasion
of such negotiations to talk about other issues in the relationship. So there
is an exit door for the Iranians from their isolation, there is a way out for
them diplomatically. By the way, it is the same offer being made in conjunction
with China, Russia, and the Europeans, backed up by the other great powers of
the world. So the Iranians ought to just listen to this, they ought to know
that it is there, and they ought to accept this offer.

The suspension which would be temporary of their nuclear program for the life
of the negotiations is a fair bar for them to be asked to meet. You cannot
expect us to negotiate with a country and allow them to continue their nuclear
research. They would have every inclination to prolong the negotiations so that
they could master the fuel cycle. We are not going to let them do that. So I
think it is a very fine offer we have made, and it is an American attempt to
talk to the Iranians.

MR. STROBEL: Warren Strobel with McClatchy Newspapers. Nick, you mentioned that
the al-Quds Forces are an organ of the Iranian government, and I think the
president talked about al-Quds a little bit this morning as well. Can you give
us the U.S. government's understanding of what that force is, who it reports
to? Does it report to Ahmadinejad? Does it report to the Supreme Leader? How
independent is it? This is important because it obviously gets to the question
of the government's intent. You mentioned Iran is a state unlike some of the
other people causing trouble in Iraq, but it is not a unified state that we
sometimes think about. Thanks.

UNDER SECRETARY BURNS:I think I will resist the temptation to draw an
organizational chart for obvious reasons, but suffice it to say the Quds Force
is part of the Iranian defense and intelligence establishment. It is a major
part of the Iranian government. Therefore, the actions of that force, and this
is the point that the president at several junctures in his press conference
today, are the responsibility of the Iranian government and if that force is
supplying this technology to Shia insurgent groups, then obviously the Iranian
government is responsible for the actions of that force.

MR. PASCUAL: So whether the Iranian government directed it or not, the Iranian
government should take responsibility and seek to stop it if now it knows about
it?

UNDER SECRETARY BURNS:If the Quds Force is part of the Iranian government, then
the Iranian government is responsible. One of the questions that people have
been asking is whether the Supreme Leader, Khamenei, the President,
Ahmadinejad, the Foreign Minister, Mottaki, whether they directed this. The
president did not speak to that today, he did not claim that today, we are not
claiming that today, but we are saying that the Quds Force is part of the
Iranian government and therefore there is an elemental degree of responsibility
there that they need to take account of.

MR. FOX: I am John Fox with Global Security Newswire. I was curious if you
could imagine a negotiating scenario with Iran somewhere in the future where
they would be allowed to have enrichment on their own soil, or is it the
American view that that would be unacceptable?

UNDER SECRETARY BURNS:The Russian, Chinese, European, and American view is that
the sensitive aspects of the fuel cycle should be offshore, and not on Iranian
territory. President Putin made an offer in public I believe in mid-October
2005 in a series of remarks where he said that Russia would be happy to lead a
consortium of countries to provide civil nuclear power to Iran but that he
thought, and this is still the Russian government's position, that it ought to
be offshore.

Because of Iran's history, there was an 18-1/2 year period with the IAEA where
they did not tell the truth to the IAEA about what turned out to be secret
nuclear research that was undeclared, because of that history, there is no
consensus at all in the international community that we ought to allow the
sensitive parts of the fuel cycle to take place in Iran itself. So the nature
of this offer from us is, and this was very much part of the June 1st proposal
by the P-5 and Germany, let us help you have civil nuclear power but we will
supply the fuel for your reactors and then take back the spent fuel. The
Russian government has been the leader on that and of course a lot of the
European governments have a lot of experience in that kind of thing and they
were willing to put together a consortium and we have put our political weight
behind it, we, the United States. We thought it was a fair offer. We still do.
It is still the nucleus of this offer that is sitting on the table waiting for
the Iranians to pick it up.

MR. FASHURI: I am Falka Fashuri from Voice of America Television which has
broadcasts from Pakistan. Are you asking Pakistan for any kind of cooperation
on Iran's issue, and if you have already asked, what does Pakistan say? What do
you expect Pakistan to do to help you in Iran's issue?

UNDER SECRETARY BURNS:I think I will just speak generally that we are not in
the habit of repeating publicly everything we say to another government or what
that government says to us, certainly not. We have had talks with the Pakistani
government, the Indian government, a variety of governments around the world,
and our advice is that Iran is a depreciating asset in the world and that doing
business with Iran is somewhat risky. That was our advice a year before Iran
fell under Chapter VII sanctions, and now they do, and those sanctions will
likely get more severe as we go along if Iran continues on its nuclear course.

I would not want to single out Pakistan because we have had this type of
discussion 30 or 40 countries that do business with Iran including some of the
Arab states and all the European Union countries. It is our particular point of
view. Our view is, it is not a good insurance risk. If a country is going to
fall under sanctions and if the sanctions will be strengthened, do you really
want to do business with it? There are alternatives in almost every case. If
you are looking for energy relationships, there are alternatives. Certainly in
South Asia a very good alternative would be Kazakhstan.

QUESTION: Thank you. My name is (off mike) I am from the Cato Institute. You
said that conflict with Iran is not inevitable. How much leverage does the
United States have over Israel's actions with respect to Iran?

UNDER SECRETARY BURNS:I meant what I said. We have been very careful in what we
have said over the last few weeks to indicate that there is a diplomatic
opportunity here, that we ought to grasp it, and that we ought to stick with it
over time. So there is no inevitability to a conflict. There have been these
major news magazines that have done these big stories, is there going to be a
conflict or not, our view is that we should try to avoid a conflict with Iran.
We should use other methods, diplomatic, economic coercion, sanctions from the
Security Council, financial measures, to try to convince the Iranians that
there is another way forward and to raise the cost to the Iranians of their
present behavior. So that is why I said that, and we very much believe that. I
very much believe that. It would be a great mistake to give up on diplomacy
now, and there is nobody in our administration who wants to do that. We all
want to march forward.

As for Israel, all I will say is President Ahmadinejad has given the Iranian
government a lot of problems through his statements. Here is the president of a
member state of the United Nations which says the policy of his country is to
wipe another country off the map of the world. That is an extraordinary
statement by any standard in the sometimes cynical debates that you find at the
United Nations. He also denied the historical fact of the Holocaust and held a
conference to try to disprove what all of us know to be true, the horrors of
the Holocaust in the Second World War.

So I think he has given Iran a very bad name internationally, the President of
Iran, he has isolated his own country. He has now stimulated attacks on him
from other political figures in the country. It is an extraordinary drama to
watch. It is another indication that this is not a monolithic government and
that they are not all united on this line that they have to become a nuclear
weapons power as Ahmadinejad obviously intends himself in terms of his goals
for the country. We hope that those voices in Iran that want to have a sane
national discussion and negotiation will triumph in the end.

MR. NEEAZALA: Mike Neeazala. On one hand the United States negotiates and even
rewards North Koran before they suspend their declared nuclear weapons program.
On the other hand, the United States refuses even to enter into negotiations
with Iran before they suspend what they call a peaceful nuclear energy program.
My question for you is, what is the rationale behind these two very different
opposite approaches? Is it because North Korea is a nuclear weapons state and
Iran is not?

UNDER SECRETARY BURNS:I do not think there are many differences between them at
all. We are not refusing to have negotiations or discussions with the Iranians.
We are trying very hard to have those discussions. I have repeated this four or
five times, so for the sake of the others I will not repeat it again, but this
is exactly what we are trying to do, have a negotiation with Iran on the
nuclear issue.

There is a lesson in what happened Six-Party Talks yesterday perhaps for the
Iranians, and the lesson is this, that there are some good things that could
result from international negotiation with Russia, China, the Europeans, and
us, and the Iranians if they could give up their nuclear weapons ambitions and
content themselves with civil nuclear power. That is essentially what we are
doing with the North Koreans as you know. We are trying to implement the
September 19, 2005 agreement. Yesterday was a very good first step. Now we are
going to have to see over the next 60 days whether the North Korean leadership
will now implement the agreement that they reached with us, Japan, South
Korean, Russian, and China yesterday.

So there are some links here and there are some lessons. I am sure the Iranians
are watching what happened with North Korea. It has to be on their minds
because they see an international community, specifically, Russia and China,
voting for sanctions against them, willing to raise the temperature in terms of
international pressure. That was the same dynamic that we had after the missile
test of July 4th and 5th, and the nuclear of October 9th with North Korea, and
you see what happened to the North Koreans. You had China play a very strong
role in trying to convince the North Koreans to agree to the proposal put on
the table by the five parties yesterday. So we hope the Iranians will look at
this and understand that we are serious about a productive negotiation should
they agree to come to the table.

MR. PASCUAL: Let me take two more questions over here.

MR. ISWAN: Bagram Iswan from Afghanistan Press. What is the feedback you have
been getting particularly from Russia and China in relation to a possible
second U.N. Security Council resolution on Iran? What will be the key thrust of
such a resolution?

UNDER SECRETARY BURNS:We said in Resolution 1737 that if after 60 days, 60 days
is up February 21st, next week, the Iranians have not met the conditions
imposed by the U.N. Security Council, we would have to reflect on what else to
do. We have agreed, the permanent 5 and Germany, on a graduated approach to a
series of escalating measures or sanctions to be taken against the Iranians, so
I suppose that is ahead of us. We have had very good discussions with the
Russians and the Chinese about the way forward, and we are working I think very
well with both of them and also with the Europeans.

MR. PASCUAL: I am going to ask one of my Brookings scholars if I might if he
would like to raise a question from the floor, Ken Pollack. Ken has been a
great scholar on issues related to Iran as well as Iraq and has been analyzing
the regional dynamics at play. Ken?

MR. POLLACK: Thank you, Carlos, and thank you, Nick, for coming and for making
so many fascinating remarks. One of the things that you said that caught my
attention was on Iran's role in Iraq, and in particular it was the simple fact
that you said that Iran is going to have a role in Iraq. I thought I would
maybe see if I could tease out a little bit more on that question. What kind of
role do you envision for Iran in Iraq right now? In particular, you've talked a
lot about what you do not want them to do, what do you want them to do? What
could they be doing that would be helpful in Iraq? And if they were willing to
do it, what kind a seat at the table would you envision for them? What could
they hopefully gain from that engagement with Iraq?

UNDER SECRETARY BURNS:Ken, you're an expert, you know better than I that it
just an inevitability that Iran is going to be influential in Iraq. It is a
neighboring state, it has close relations with many in the Shia leadership, it
has economic relations, and so the question is not whether Iran is going to
have a role, it is the question you asked, what type of role.

We would hope that the Iranians would argue for the following, for an Iraq that
will stay together, an Iraq where Iran will reach out not just to the Shia, but
to the Sunni leaders and population, and the Kurdish population to help them
economically, politically, to unite the country, and to adhere to the
democratic process. We would hope that Iran would argue that Shias should not
take up guns against either the government of Iraq or the coalition forces, the
U.S. and U.K. forces, but that is not what Iran is doing.

Iran has a fairly self-centered, I would say even selfish policy in Iraq. Iran
is arguing for its narrow interests. It is not arguing for the wider interests
in a very complicated environment in Iraq. So we would hope that the Iranians
would come to see that they have an interest in stability, that stability can
only be produced if all the other ethnic groups in Iraq are taken care of, if
their rights are respected, if the insurgent attacks against the civilians in
Iraq, and the Kurdish and Sunni areas stop, if Iran would then play that bigger
role.

The problem we have with Iranian foreign policy not just in Iran but in the
Middle East is the following, take any issue, whether it is Lebanon or the
Palestinian-Israeli issue or the issue of Iraq, Iran is playing a disruptive,
negative, divisive role. It is not arguing for peace between Israel and the
Palestinians. It is not saying that there should be the creation of two states
living side by side in respect to each other. That is what we are saying, but
that is not what they are saying.

It is not arguing for maintenance of a democratically elected government of
Lebanon. It is saying that the government should be brought down by force if
necessary and a new government should replace dominated Iran's friend
Hizballah. In Iraq it is not arguing as Britain, the United States, the
European Union and most of the Arab world is for a unitary state, a state that
is united, a state where terrorism ends, it is not arguing for that. So if Iran
aspires to real leadership in the Middle East, it is going to have to meet that
test of moral leadership, of positive leadership, and of full engagement. And
on the great issues in the Middle East, Israel-Palestine, Lebanon and Iraq,
Iran has taken a very different view than almost everybody else, and that tells
you something about the nature of Iranian foreign policy.

It also tells you why we are opposed to what the Iranian government is doing
and why we have talked with such determination about our intention to play that
positive role and to seek to have Iran play its negative role.

MR. PASCUAL: I promised a question to the gentleman right back here, so we will
close up with this question.

QUESTION: (Off mike) St. Louis Post- Dispatch. Haven't a number of
administration policies over the last few years really strengthened Iran? They
have seen their two major enemies on either side of them toppled, they have
seen us mired down in Iraq, and they have seen our prestige internationally
plummet. So haven't we really boosted the major threat in the Middle East?

UNDER SECRETARY BURNS:I can assure we did not go into Afghanistan and Iraq to
help the Iranians. It may be that the Iranians feel that they are better off
because Saddam is gone, or were better off because Saddam is gone. The Iranians
are very concerned about the resurgence of the Taliban. They have a major
problem in Afghanistan. The narcotics flow into the western part of Iran and it
represents a very serious threat to the Iranian people there, and we are trying
to stop those narcotics flows. The Iranians are going to have to look around,
as I said before to Ken, and figure out a way to be we hope more positively
engaged whether it is in Afghanistan or Iraq, but our policy is based on doing
what is best for the United States and for our friends in the world. We are not
a charitable organization for the Iranians.

I think that the Iranians have derived of course some advantage from the fact
that the Taliban were defeated strategically in 2001, although they are alive
and kicking, and that Saddam fell. But in the final analysis over a period of
decades, the Iranians are going to be measured and judged by the quality of
that engagement, and I want to come back to that. I think that is the test for
Iran, they are not meeting it now, and it is why they have so few friends in
the region and why ultimately I think what they stand for in their foreign
policy is not going to have a lot of resonance region-wide.

What you have now is a very interesting phenomenon over the last 6 to 8 months
of the Arab countries of the Gulf and of the Levant very consciously engaging
the United States to say please stay involved in Iran and in the Gulf, please
stay involved to help us counter some of these negative forces that are
appearing, and that is the message that is being replicated by the Europeans.
So while it may look like the Iranians have derived some immediate advantage in
the immediate aftermath of these two wars in Afghanistan and Iraq, I do not
think that is how it going to play out over time, and they are going to have to
meet that test of leadership which they currently are not meeting.

QUESTION: Could I ask you a follow-on on what you said about the drugs? The
Iranians have lost about 3,500 border police fighting Afghan drugs. The Afghans
say that they have been much more helpful than has Pakistan in combating
narcotics in Afghanistan. We are both on the side of that right, the U.S. and
Iran, but we never talk about the positive role Iran is playing in that. Why?
And why don't we cooperate with them on that?

UNDER SECRETARY BURNS:We have a full effort underway in Afghanistan and we work
most closely with countries that are working in concert with us. The Iranians
have not offered to play the kind of role that the NATO allies are playing or
the kind of funding role that some of the Arab governments are currently
playing. So we tend to concentrate in the way we work with countries on those
countries that are actively engaged.

I think you are right that the Iranians do have the same immediate interest in
trying to cut off the flow of narcotics. That is coincidental to ours as well.
But we are playing a major role in that effort and we need to do better in that
effort, all of us, to try to diminish the poppy crop which was at record levels
last year and also disrupt the trade routes which particularly affect Iran and
the European countries.

QUESTION: I just came back from the Munich security conference where Ali
Larijani made it clear that Iran is ready for negotiations. He specifically did
not mention the U.S. or the European Union, and he said that he and his
government is willing to guarantee those  countries about the future of
Iran's nuclear plan. I hear the same thing from you, that the U.S. is willing
to start negotiations. My question is, what is stopping the two countries?
Would that be something related to different voices that come from Iran,
because President Ahmadinejad also spoke the same day as Ali Larijani with the
same authority, and the final decision is by Ali Khamenei, the Supreme Leader.
I would like to hear your response.

UNDER SECRETARY BURNS:What is stopping an agreement to begin negotiations is
Iran needs to say yes. Again, it is not just a drama between the United States
and Iran. It is Russia, China, Europe, and the United States saying please come
to the negotiating table, but you have to pay a down payment. It is a
reasonable down payment. It is a temporary down payment. So we will see. The
proof will be in the details of what Mr. Larijani says to the Europeans, and we
have been down this road before, unfortunately, many different times over the
last few years and over the past year and so we will have to see if the
Iranians are willing to do what all of us want them to do, and if they can do
it, we will be at those negotiations and we will be very happy to start on that
basis.

MR. PASCUAL: Again, Nick, just to be clear, the key distinction here is that
Iran has to accept that for the period of the negotiations they will suspend
the enrichment program.

UNDER SECRETARY BURNS:Yes.

MR. PASCUAL: Not a permanent suspension, but for the period of the negotiation.

UNDER SECRETARY BURNS:We said suspension of suspension, so it is suspension of
enrichment, suspension of sanctions for the period of the negotiations.

MR. PASCUAL: Nick, I really thank you for doing a tremendous job of walking us
through a tremendously complex set of issues related to Iran on a global and on
a regional level. I will certainly take from this discussion a few points that
you made since we have time, that a diplomatic path is the path that is being
pursued, that there is a dynamic which has been initiated and one has to
continue to keep moving that dynamic forward in order to try to achieve a
diplomatic success, and that a very clear offer has been made as you have just
said, suspension for suspension, that for a defined window there is an ability
to actually have a negotiation if Iran is willing to say that it will suspend
its program in order to come to the negotiating table.

UNDER SECRETARY BURNS:Correct.

MR. PASCUAL: I think it is a very powerful message that you have left us here
today, and thanks for taking the time to have this conversation with all of us.

UNDER SECRETARY BURNS:It's a pleasure. Thank you, Carlos.

(Applause)

* * * * *

Released on February 15, 2007

************************************************************
See http://www.state.gov for Senior State Department
Official's statements and testimonies
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US Vice Admiral Patrick M. Walsh, Central and Fifth Fleet Commander, listens during a press conference in the Bahraini capital Manama, 19 Februray 2007. Walsh expressed concern that a "miscalculation" by Iran in its nuclear standoff

MANAMA, Bahrain (AFP) - The outgoing commander of the US Navy's Fifth Fleet has expressed concern that a "miscalculation" by Iran in its nuclear standoff with the West could spark an armed conflict in the Gulf region.

Vice Admiral Patrick M. Walsh, who also heads the US Naval Forces Central Command, told a small group of journalists at Fifth Fleet headquarters in Bahrain that Iran was more likely to threaten oil traffic through the Strait of Hormuz than mine the strategic passageway in the event of a showdown.

"What concerns me is miscalculation. That's certainly what we are trying to avoid... a mistake that then boils over into a war," Walsh said late Monday.

Walsh, whose forces' main mission is to secure free navigation in the Gulf and in a zone stretching from the northwestern part of the Indian Ocean to Pakistan in the east, was referring specifically to the northern part of the Gulf, where two Iraqi oil platforms are located and "the incursions from Iran have continued to grow over time."

He made his remarks as a second nuclear-powered US aircraft carrier arrived in regional waters in an apparent warning to Tehran, which Washington accuses of seeking nuclear weapons and fueling the anti-US insurgency in Iraq.

The USS John C. Stennis and its accompanying strike group joined the USS Dwight D. Eisenhower in the Sea of Oman, the first time the US has had two aircraft carrier groups in the region since its 2003 invasion of Iraq, compounding speculation about a possible US strike against the Islamic republic.

"We would expect the duration of the time here for the Stennis to be several months," but its arrival is "not necessarily a precursor to offensive actions," said Walsh, stressing it will initially support operations in Afghanistan.

"There is a national and international commitment to try and work through this crisis (over Iran's nuclear programme) through diplomatic channels," namely the UN Security Council and the International Atomic Energy Agency, Walsh said.

The countries of the region want a solution through such mechanisms "and we are very supportive of that."

But Walsh, who has been commanding the Fifth Fleet since October 2005 and will leave Bahrain for Washington later this month to become the US Navy's number two, did not hide his concern about Iran's belligerent posture.

"They (Iranian leaders) threaten to use oil as a weapon, they threaten to close the Strait of Hormuz, and so, it's the combination of the rhetoric, the tone and the aggressive exercises here in very constrained waters that gives us concerns," he said.

"In the past year and a half it (Iran) has become much more strident, more vocal and in your face," Walsh, 52, said.

He recalled that during war games dubbed Great Prophet 2 in November in which Iran fired ballistic missiles in the Gulf, the Iranians "put their mines on their small boats and then displayed that... for all to see."

The exercises "focused on the Strait of Hormuz," through which at least 20 percent of the world's energy passes.

"The only conclusion that we can draw from that is that it is meant to intimidate and provoke those who are in the region," Walsh said.

The US commander said that while Iran would not be able to close the Strait of Hormuz by using mines, it could "terrorise" the passageway, which would have a "dramatic impact" on world oil markets.

"To block all six miles (used by ships) would be a very difficult mission," Walsh said.

"They would have to sit there and plant minefields for an extended period of time, and many would be able to see that," he said.

"I think a more realistic characterisation is that Iran would terrorise the Strait... That would have a dramatic impact on markets around the world."

Walsh said that the United States and its allies had deployed more minesweepers in response to Iranian threats against the Strait.

"There are more mine-clearing capabilities here in the region than there were a year ago... So when Iran talks about the ability to close the Strait of Hormuz by using mines, we come out with mine-clearing capabilities," he said.

A Fifth Fleet spokesman said that the number of minesweepers in the area was raised from four to six last summer, with Britain sending two ships to join four US minesweepers.